Formal Effects of Informal Labor: Evidence from Syrian Refugees in Turkey

Ahmet Gulek

No 2584, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: I study the effects of Syrian refugees, who are denied work permits and thus can only work informally, on Turkish firms and workers. Using travel distance as an instrument for refugee location, I show that low-skill natives lose both informal and formal salaried jobs. I document two mechanisms: formal firms reduce their formal labor demand and new firms do not enter the formal economy. Estimates imply an elasticity of substitution of 10 between formal and informal workers. Counterfactual exercises predict that granting refugees work permits would have created up to 120,000 formal jobs in the economy through higher informal wages.

Keywords: Informality; Immigration; Refugee crises; Work permits (search for similar items in EconPapers)
JEL-codes: D22 J15 J21 J46 J61 (search for similar items in EconPapers)
Date: 2025-10
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