Refugee Inflows, Task Upgrading, Wages and Productivity in Turkey’s Dual Labor Market

This paper studies how large-scale refugee inflows affect native workers, firms, and aggregate productivity, using the arrival of almost 4 million Syrian refugees by the end of 2018 in Turkey as a natural experiment.

Linking matched employer-employee administrative data to firm balance sheets, we trace effects across three levels of analysis. At the worker level, refugee exposure raises wages of formally employed native men and shifts them away from manual tasks toward more cognitive-intensive occupations; person-firm fixed effects reveal that task upgrading occurs substantially within existing employment relationships. At the firm level, refugee exposure increases total factor productivity - by approximately 4% for a 10 percentage point increase in the refugee-to-native ratio - without corresponding increases in capital intensity or outsourcing. At the aggregate level, we implement Olley-Pakes and dynamic Melitz-Polanec decompositions to quantify the relative contributions of within-firm improvements, reallocation across firms, and firm entry and exit to aggregate productivity growth.

These findings are consistent with task-based specialization operating through Turkey's dual labor market: Syrian refugees, working predominantly in the informal sector, provide low-cost manual labor that complements formal native workers, enabling firms to reorganize production toward higher-value activities.

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