This paper estimates the distributional effects of the Syrian refugee influx on the labor market outcomes of natives in Turkey. The authors use data from the end of 2015, when there were 2.5 million registered Syrian refugees in Turkey, almost all of whom were working in the informal sector. Most previous studies the impact of Syrian refugee flows use regional variation in the migrant influx in a difference-in-differences methodology. Pointing to data that shows significant regional differences and strong time trends in labor market outcomes in Turkey (e.g. an increase in employment in the formal sector, decrease in employment in the informal sector, and increase in real hourly wages in the informal sector from 2004 to 2011), the authors argue that a key assumption of the difference-in-difference methodology—that the trend in outcomes are uniform across regions—is not valid. Rather, they relax the common-trend assumption in a number of ways, most importantly by allowing the year effects to vary across groups of regions. Key findings include:
- There are no adverse effects of the Syrian refugee influx on overall employment or wages of native men. The decrease in employment of men in the informal sector is offset an increase in employment of men in the formal sector. A shift from wage employment to self-employment and unpaid family work takes place.
- There are no adverse effects of the Syrian refugee influx on wages for native women, however total employment of native women falls due to a decline in part-time employment. Women who lose their part-time jobs exit the labor market.
- The Syrian refugee influx has favorable effects on complementary workers in the formal sector; both wage employment and wages of men in the formal sector increase. Increases in prices in the product market and in capital flow to the treatment regions contribute to the rise in labor demand in the formal sector.
- Native workers in the labor-intensive and informal-dominated construction and agriculture sectors are substantially adversely affected. In the construction sector, native men’s employment is remarkably reduced. In the agricultural sector, women’s employment and both men’s and women’s wages are substantially adversely affected (an increase of 10 percentage points in the ratio of migrants to natives causes a 15–20 percent fall in agricultural wages for both men and women).
- In the manufacturing and services sectors, jobs generated in the formal sector exceed jobs eliminated in the informal sector. Both men’s and women’s wages in the formal manufacturing sector and men’s wages in the formal services sector increase.
- The negative effects of the arrival of Syrians on wage employment and wages in the informal sector are more pronounced among the less educated and younger workers. The positive effects on wage employment and wages in the formal sector are also stronger for the less educated and younger workers.
Unlike Cengiz and Tekguç (2018) who claim no adverse effects of the refugee influx on natives’ employment or wages overall, this paper finds robust adverse effects on employment of men in the informal sector and for women in the overall labor market, as well as adverse effects on the overall wage employment of men. A key difference of the findings of this paper is that the refugee influx has a positive effect on the wages of men in the formal sector and the wages of women employed full-time in the formal sector.