Blessing or Burden? The Impact of Refugees on Businesses and the Informal Economy

Abstract

We study the impact and sudden arrival of more than 3 million Syrian refugees on Turkish businesses. Our empirical design uses the exogenous variation in refugee outflows from Syria and the geographic concentration of Arabic-speaking communities in Turkey prior to the onset of the Syrian conflict. The origin of these communities dates back to the rupture of the Ottoman Empire after World War I, a unique historic episode. Using yearly firm census data from 2006 to 2015, we find that refugee inflows induced a positive impact on the intensive and extensive margins of firm production. The effects are stronger for smaller firms and for firms that operate in the construction and hospitality sectors, they are also largely concentrated in the informal economy.