Evaluating the impact of Syrian refugees on Turkey’s labor market: A synthetic control approach

Abstract

In this paper, the impact of recent Syrian refugee wave on natives’ labor market outcomes in Turkey is analyzed. The synthetic control method is used for the analysis, where for each treated region, a synthetic control is constructed by weighting control regions in a way that pre-treatment values of treated unit is best reproduced. The analysis is made separately for NUTS-2 level regions, Hatay, Gaziantep and Sanliurfa. For men, informal employment rate decreases, while formal employment rate increases. The overall employment effect is dependent on the region. Significant increases in formal manufacturing and services sectors in Gaziantep are enough to compensate for displacement from informal jobs. In Hatay, overall employment rate decreases and in Sanliurfa unemployment increases. Wage effects are observed only in Sanliurfa, where both informal and formal wages are in decline. Women working in agriculture sector informally in Hatay are the subgroup that have been most adversely affected by immigration in terms of employment. These findings indicate that regional differences play an important role in determining the ability to absorb the labor supply shock resulting from immigration.