ECONOMIC IMPACT
OF SYRIAN
REFUGEES
WHO ARE WE?
Özgecan Yazar
Can Hallı
Nuran Efendioğlu
Gülden Kaygısız
1. GENERAL OUTLOOK
2. EDUCATION
3. LABOR MARKET
4. WAGES
5. PRICES
6. EU-TURKEY DEAL
INDEX
1.
GENERAL
OUTLOOK
What is the latest
situation for Syrian
refugees?
GENERAL ATTITUDE AND REGULATIONS
▸ Largest number of refugees in the world
▸ Generous open-door policy for Syrian “guests”
▸ Law on Foreigners and International ProtectionYabancılar ve Uluslararası Koruma Kanunu
▸ Temporary Protection Regulation- Geçici Koruma
Yönetmeliği
MANAGEMENT AND NUMBERS
▸ Directorate General of Migration Management –
Göç İdaresi Genel Müdürlüğü (DGMM)
▸ GOC-NET
▸ 2.5 million Syrians registered in Turkey by the end
of 2015- 2.75 million by the end of 2016
▸ 300,000 will be hosted in the official refugee
camps managed by the Disaster and Emergency
Management Presidency (AFAD)
▸ 2.45 million will live within host communities
www.goc.gov.tr
TURKISH POLICY TOWARDS SYRIANS
▸ “passage with careful control” intended to:
- restrict number of entries
- prevent unlawful and dangerous entries
- control the arrival of members of particular
ethnic, national, religious, and ideological groups.
▸ Initially very welcoming
- ignored long-term or permanent stay
- providing aid and assistance in camps
▸ >70% of respondents to think that the refugees
are damaging the Turkish economy
▸ >60% opposed to aiding Syrians when
there are Turkish citizens living in poverty
TURKISH POLICY TOWARDS SYRIANS
▸ AFAD sole authority in determining the terms of
camp management and creation of new camps.
▸ NGOs playing an increasingly active role
▸ 139 international NGOs accredited in Turkey
(October 2015)
▹ Support local NGOs on protection of and service
delivery to noncamp refugees
FINANCIAL POLICY TOWARDS THE REFUGEE INFLUX
▸ full responsibility for funding and managing the
camps through national organizations, not
international actors such as UNHCR
▸ By early 2015, financial costs of the keep of these
camps reached $5 billion
▹ International community covered 3 percent
LEVEL OF SUPPORT IS NOT SUFFICIENT
As of August 2015,
government spent
$5.6 to 6.0 billion
International
assistance less
than $400 million
FOOD POLICY IN THE CAMPS
▸ WFP partnered with Turkish Red Cross (TRC) and
AFAD to set up an electronic voucher program in
2012
▸ UN provides 50 TL per person per month
▸ AFAD provides 35 TL per month
▸ Injection of around $27 million in 2015, over
$136.5 million since the beginning of e-voucher
HEALTH POLICY IN THE CAMPS
▸ Same healthcare services as Turkish nationals,
under Temporary Protection Regulation
▸ Emergency care for both the registered and
unregistered
▸ Additional patient load of 30-40% in 2015
▸ Shorter time allocation to patients
▸ MoH identified three main challenges: Lack of
registration, lack of information, language barriers
LIVELIHOOD OF THE REFUGEES
▸ Work permit as of January 2016
▹ Apply after temporary identification
▹ No more than 10% of Turkish employees per
workplace
▹ Permit for temporary employment in agriculture
2.
EDUCATION
Numbers and
schooling
“
If a person is sick, they can get treatment
and get better. If a child doesn’t go to
school, it will create big problems in the
future—they will end up on the streets, or
go back to Syria to die fighting, or be
radicalized into extremists, or die in the
ocean trying to reach Europe.
NUMBERS ON EDUCATION
▸ 13% of Syrian school-aged children attend school
▸ 90% of those in camps attend school
▸ Ministry of Education estimates that additional cost
of educating Syrian students in 2014-2015 was 700
million TL
FORMS OF EDUCATION
▸ Turkish public schools
▹ 36,655 enrolled Syrian students enrolled
▹ 6% of the total school aged population in Turkey
▸ Temporary education centers
▹ Syrian curriculum in Arabic
▹ 34 in camps, 232 outside camps
▹ Enrolment 74,097 in camps, 101,257 outside
camps
FORMS OF EDUCATION
▸ The government of Turkey obligated to provide all
children in Turkey free primary education
▹ Temporary education centers, enrolment IDs
▸ Barriers:
▹ Language
▹ Economic hardship
▹ Social integration
LOOKING INTO THE FUTURE
▸ Save the Children estimates current out-of-school
rates’ cost will be $2.18 billion a year due to lost
wages
▸ Lower earning will be a problem for host country’s
economy
▹ Drive up the cost of aid
▹ Change labor composition
3.
LABOR MARKET
Labor force and
employment
EXAMPLES FROM OTHER COUNTRIES
▸Little evidence of immigrants to US harming
employment opportunities of natives (Card 2005)
▸The repatriates from the African colonies to France
and Portugal: negative effects on employment and wage
▸Germans in Eastern Europe returning to Germany:
small negative effects on wages and internal migration
(Glitz 2012)
GENERAL CONDITIONS
▸None of the Syrian refugees received work permit (until
Jan 2016)
▸They nevertheless have high employment rates
▸No matter what their qualifications, all refugees were
employed in the informal sector.
▸Inflow of refugees increases the supply of informal
labor
ECONOMIC THEORY
▸labor supply shock
▸inflow of refugees -> lower wages and displace
natives from the informal sector
▸Generally, increase in LS is greater than increase in
LD
LABOR SUPPLY SHOCK
EMPIRICAL DATA IN OTHER COUNTRIES
▸Early studies regarding immigration suggest:
▸Immigrants have only a small effect on natives’ labor
market outcomes (they are poor substitute in the short
run because human capital stocks of immigrants are not
immediately transferable to the host economy)
▸Effect of immigrants on the labor market outcomes of
natives can only appear in the long run
EMPIRICAL DATA IN OTHER COUNTRIES
▸Later studies suggest:
▸Immigrants are perhaps better substitutes for natives
than the early studies suggest
▸More recent literature adopts a production-function
approach
▹Immigrant and native workers are two substitutable
inputs.
▸More sizable effects of immigration on the labor market
outcomes of the natives are observed
EMPIRICAL DATA IN TURKEY
▸First impact is quite obvious
▸The inflow of informally employed Syrian refugees
leads to large-scale displacement of Turkish workers
from the informal sector
▹Around 6 natives for every 10 refugees
▸Large informal job losses for Turkish without any
formal education
EMPIRICAL DATA IN TURKEY
▸Second impact, theoretically ambigious
▸Lower wages in the informal sector will result in
substitution from formal to informal workers (for firms)
▸However, lower production costs will also expand
output and increase the demand for formal workers
EMPIRICAL DATA IN TURKEY
▸Turkish can take advantage of low cost refugee labor
generating additional jobs
▸Estimates suggest a positive impact of refugees on the
propensity of Turkish to be formally employed, around 3
additional for every 10 refugees.
EMPIRICAL DATA IN TURKEY
▸These increases in formal employment for natives all
accrue to men without a completed high school
education. Women and high-skilled natives experience
no gains in formal employment.
EMPIRICAL DATA IN TURKEY: REASONS
▸1) High-skilled Turkish workers are not employed in
industries with a lot of informality, hence cannot easily
take advantage of lower cost informal labor
▸2) Women Don’t work in construction sector (50%
informality), mostly in agriculture(96% informality), any
formal jobs generated in agriculture are therefore unlikely
to go to women.
EMPIRICAL DATA IN TURKEY: NET IMPACT
▸Net impact on employment is negative for women and
the least educated Turkish
▸Women and the least educated increasingly drop out
of the labor force (there are no increases in
unemployment)
EXPERIMENTS AND METHODOLOGY
▸Difference-in-differences strategy to estimate the
impact of refugee inflows on the labor market outcomes
of natives
▸Inflow -> starts in 2012
▸Treatment date: January 1st, 2012
▸2010–2011 and 2012–2013 are set as pre-immigration
and post-immigration periods, respectively
EXPERIMENTS AND METHODOLOGY
▸Treatment area: Cities in the Southeastern part of
Turkey, where refugee population ratio is above 2
percent
▸Control area: Rest of the cities in neighboring regions
that are hosting negligible amounts of Syrian refugees
▸Cultural aspects, socio-demographic characteristics,
and the level of economic development are similar for T
and C
4 MAIN OUTCOMES
▸Defined in terms of their ratios to the population of
native workers of age 15–64:
▸1) not in labor force
▸2) formal employment
▸3) informal employment,
▸4) unemployment
INFORMAL EMPLOYMENT
▸Informal employment to-population ratio declined by
around 2.2 percentage points as a consequence of
refugee inflows for natives
▸Of this decline in informal employment, around 50%
went out of the labor force, 32% remained unemployed,
and 18% switched to a formal job
INFORMAL EMPLOYMENT
▸For males, decline in informal employment-topopulation ratio is 1.9 percentage points
▹Most of the males who lost their informal jobs
remained unemployed
▸For females the decline is much higher, 2.6
percentage points
▹Almost all of the females who lost their informal jobs
went out of labor force
SUMMARY
▸Among these substituted natives:
▹Females found it extremely difficult to find new jobs
and, consequently, dropped out of the workforce
▹Males preferred to stay in the labor force, which has
led to increased incidence of unemployment
SUMMARY
▸Unemployment has increased
▸Labor force participation, informal employment, and job
finding rates declined for natives
▸Disadvantaged groups—i.e. females, younger workers,
and less-educated workers—have been affected the
worst
4.
WAGES
Immigrant effect on
wages
▸ Most people agree with the statement that
immigration lowers the wages in the receiving country
▸ Lower skilled workers are more concerned
ECONOMIC THEORY
▸Immigration affects wages of resident workers if the
skill distribution of immigrants differs from that of native
workforce.
▸E.g. all immigrants are unskilled
▹Excess unskilled labor supply
▹Satisfy demand for unskilled at lower wages
▹Relative scarcity of skilled workers
▹Skilled worker wages go up
WAGE EFFECTS OF UNSKILLED IMMIGRATION
ECONOMIC THEORY
▸The model above is too simple
▸In reality, adjustment mechanisms kick in:
▹The production of unskilled-labor intensive goods may
be increased (changing the output-mix)
▹Change the production technology to absorb the
additional supply of unskilled workers
OUTCOMES
▸Immigrant effect on wages depends on
▹Elasticity of capital supply
▹Elasticity of labor supply
▹Whether skill distribution is changed
▹Whether adjustment mechanisms are in action
OUTCOMES
▸Theory predicts inflow of refugees should displace
natives from informal sector and decrease wages
▸6 natives displaced from informal sector for every 10
refugees
,
,
,
,
5.
PRICES
Labor composition
and price levels
EXAMPLES FROM OTHER COUNTRIES
▸Refugee crisis in Rwanda caused an increase in food
prices in Tanzania (Alix-Garcia and Saah 2010)
▸Regional price level differences in Germany are
considerable and persistent
LABOR CHARACTERISTICS
▸Informal employment/population 0.2, formal
employment/population 0.19 for southeastern Anatolia
▸Observed characteristics similar to natives
▸Gender composition balanced
▸Low education levels (20% high school or above)
▸Mostly 19-54 age group
LABOR CHARACTERISTICS
▸Not able to work officially (pre-2016)
▸Large informal sector -> work in low-wage informal
jobs
▸Wages lower than average low-skill native worker
ECONOMIC THEORY
▸Three theories about the impact of immigration on the
level of consumer prices
▹1. AD increases, prices of goods and services increase
▹2. Immigrants will search for lower prices more
intensively + higher price elasticity = competitive
pressure on firms -> price reductions
▹3. immigrants have lower reservation wages -> labor
cost advantage in immigrant labor intensive sectors =
price reduction in these sectors relative to native labor
intensive sectors
EMPIRICAL DATA
▸Decline in overall price level, on average by 2.5%
▸Good prices decreased by approximately 2.6%
▸Services prices decreased by approximately 2.2%
▸4% reduction in prices in informal-labor-intensive
sectors
▸0.4% reduction in prices in formal-labor-intensive
sectors
EMPIRICAL DATA
▸ Mechanism of the decrease in price level is related to
informal employment.
Percentage Decline
in Prices
4.5%
10.5%
5.4%
OUTCOMES
▸Prices of both basic and luxury food items decline.
▹More significant for basic
▸Refugee crisis does not have a statistically significant
impact on the volume of imports/exports
▸No statistically significant impact on aggregate demand
OUTCOMES
▸Akgündüz, van den Berg and Hassink show that there
is inflation in housing prices in the relevant regions, but
not very significant
OUTCOMES
▸Synthetic model in the ORSAM paper finds that had
there been no civil war in Syria,
▹Inflation would have been lower
▹Migration from other provinces within Turkey would
have been higher
▹Number of students per teacher would have been
lower
6.
EU- TURKEY DEAL
What the refugee
deal means
WHAT’S THE DEAL?
▸Turkey agreed to take back any asylum seekers who
land in Greece, starting from March 20, 2016
▸In theory, this means the closure of the Aegean
smuggling route, via which more than 850,000 people
reached Greece from Turkey last year
▸For every Syrian being returned to Turkey from the
Greek islands, another Syrian will be resettled to the EU
from Turkey directly
WHAT DOES TURKEY GET IN RETURN?
▸The EU has promised to give Ankara €3bn to help the
estimated 2.7 million Syrians now stuck on Turkish soil
▸During the Brussels Summit in March 2016, a proposal
by Turkey is outlined that it should be paid €6bn over
three years, twice the €3bn offered last November
▸It will become easier for Turks to get European visas
(June 2016)
▸EU will pay greater lip-service to the idea of Turkey
becoming a member state
THANKS!
Any questions?
REFERENCES
Akgündüz, Yusuf Emre; van den Berg, Marcel; Hassink, Wolter. 2015. “The Impact of
Refugee Crises on Host Labor Markets:The Case of the Syrian Refugee Crisis in
Turkey.” IZA Discussion Papers 8841.
Balkan Konuk, Binnur; Tümen, Semih. 2016. Immigration and Prices: QuasiExperimental Evidence from Syrian Refugees in Turkey. Ankara: CBRT.
Borjas, George J. 2009. “The Analytics of the Wage Effect of Immigration.” NBER
Working Paper Series 14796.
Ceritoglu, Evren; Gurcihan Yunculer, H. Burcu; Torun, Huzeyfe; Tumen, Semih. 2015.
“The Impact of Syrian Refugees on Natives' Labor Market Outcomes in Turkey:
Evidence from a Quasi-Experimental Design.” IZA Discussion Papers 9348.
Del Carpio, Ximena Vanessa, and Mathis Christoph Wagner. 2015. The impact of
Syrian refugees on the Turkish labor market. N.p.: World Bank Group.
Dustman, Christian; Glitz, Albrech; Frattini, Tommaso. N.p. “The Labour Market Impact
of Immigration.” London: Centre for Research and Analysis of Migration
İçduygu, Ahmet. 2015. Syrian Refugees in Turkey: The Long Road Ahead.
Washington, DC: Migration Policy Institute.
N.p. 2015. The Economic Impact of Syrian Refugees on Turkey: A Synthetic
Modelling. Ankara: ORSAM.
N.p. 2015. 3RP Regional Refugee and Resilience Plan. N.p.