Labour market and redistributive consequences of the Syrian refugees in Turkey

Norman Loayza, Gabriel Ulyssea, and Tomoko Utsumi

Oxford Review of Economic Policy, Volume 38, Issue 3 (2022), Pages 578–594


This paper examines the impact of Syrian refugees on the labor market outcomes of Turkish nationals and how these effects are distributed across workers and regions. Prior to 2016, Syrian refugees did not have work permits and predominantly worked in the informal labor market, particularly in low-wage, labor-intensive sectors such as construction and agriculture. Even after work permits became available, they were limited in practice.

The authors of the study developed a model to analyze the redistributive effects of the arrival of Syrian refugees in Turkey. The model considers the self-selection of individuals of different skill levels into their preferred regions based on their comparative advantage and mobility costs. It also considers the decision of firms with different productivity levels to register their business and hire formal or informal workers.

Data for the analysis is drawn from: (1) the Survey of Income and Living Conditions (SILC), which includes data on workers’ educational attainment, employment status, and the distribution of employment across firms of different sizes; (2) the Address Based Population Registration System (ABPRS), which provides statistics on internal migration at the regional level; and (3) the total number of refugees across regions in Turkey collected by the Directorate General of Migration Management.

Main findings:

  • The influx of Syrian refugees led to an increase in informality in the regions most affected by the refugee shock, such as Southeast Anatolia and Mediterranean, as well as in other regions due to the migration of native workers in response to refugee arrivals. Istanbul, despite receiving a substantial number of refugees, did not experience an increase in informality.
  • Wages of low-skill workers declined substantially in the most affected regions. Low skilled workers in Southeast Anatolia were strongly affected, with a wage loss of around 16 percent. Low-skill wages fell in almost all other regions, but the magnitudes were smaller, leading to an average negative effect of around 4 percent.
  • The share of informal firms increased in almost all regions, particularly in Southeast Anatolia and Mediterranean, but not in Istanbul. Informal firms disproportionately benefited from the refugee labor supply shock, leading to higher entry into the informal sector, as well as an expansion of low-productivity formal firms that hire informal workers. This led to a reduction in aggregate productivity of 1 percent in the country overall.
  • Profits and tax revenues per worker increased in the most affected regions, as the decline in low-skill wages translated into higher profits per capita. Since part of the increase in economic activity occurred in the formal sector, tax revenues per capita also increased modestly.
  • Redistributing tax revenues in per capita terms can substantially reduce low-skill workers’ losses in most affected regions, although the extent of this reduction varies across regions. Redistributing profits in per capita terms can completely restore both low- and high-skill workers’ losses, leading to an increase in per capita income for both types of workers relative to the baseline before the refugee crisis.

The arrival of Syrian refugees in Turkey had significant redistributive impacts on the labor market. Regions with the largest influx of refugees experienced a substantial increase in informal employment and a decrease in wages among low-skill workers. However, the most affected regions also saw an increase in tax revenues and profits per worker among native workers. The authors conclude that policies that redistribute the economic benefits from the arrival of refugees could alleviate the negative consequences for those workers directly affected by this shock, with positive effects on social cohesion.