There’s growing recognition that the situation in Syria can’t be “fixed”. Western governments have instead lowered their sights to negotiating some kind of detente. That means that many more people will leave their homes in search of safety overseas. A key question coloring Europe’s debate over immigration policy is whether those new arrivals will hurt the wages of existing workers.
At the recent American Economic Association meetings in San Francisco, one of our field’s highest-profile annual confabs, a trio of economists presented a compelling paper (working paper version) that sheds light on this question using data from Turkey’s labour market.
Early waves of Syrians arriving in Turkey clustered in a few areas, reflecting the routes they took and the locations of camps that provided services and shelter (roughly Turkey’s Anatolian and Mediterranean regions).
That clustering allows the authors, Yusuf Akgündüz and Wolter Hassink of Utrecht University and Marcel van den Berg of Statistics Netherlands, to pin down differences in wage rates associated with the arrival of Syrian families. Loosely speaking, they net out factors that are the same over time within provinces which received very many and very few new Syrian families in order to compare variation in outcomes across those areas.
The simplest economic model suggests that increasing a supply of something (like the number of workers) while holding demand (like the number of jobs) fixed pushes down prices — in this case, salaries.
That makes sense if new workers and existing ones are purely substitutes for one another. But if recent arrivals from Syria work alongside existing employees, they may be more like complements, boosting overall productivity, taking jobs existing workers don’t, and growing the economic pie enough to leave average salaries unchanged even as the number of productive workers increases.
In a neat result, the authors find that the influx of new workers didn’t hurt the wages of existing employees. They also confirm that this isn’t simply because of lower internal migration, a hypothesis that has been floated to explain the absence of deleterious effects of new arrivals. In their words “the decrease in internal migration is only about 0.4 percent of the population while the number of refugees arriving amounts to about 5 percent [in the six regions where camps and other resources were located]. There thus seems to be considerable net population growth without a corresponding effect on employment rates.”
It’s not all rosy, of course. As we might expect, a large influx of new arrivals — 500,000 people — had an effect on local prices. The authors do find that the cost of housing rose slightly, and that the rate at which food prices rose went up by about 0.2 percentage points, which works out to the equivalent of an extra 20 cents for $100 worth of shopping. This cost growth shouldn't weigh too heavily in our mental accounting. For one thing, traders and producers will react, bringing it back down. For another, many of those traders and producers are Turkish, and more Syrian arrivals means more customers. (There’s also some evidence of a small bump in unemployment, but this effect isn’t distinguishable from statistical noise).
This analysis doesn’t nail everything down. In particular, it only studies labour market data from 2011 to 2013 (national statistical organisations release these datasets with lag, so economic literature lags the demographic reality). It’s also possible that the earliest waves of Syrians to arrive in Turkey are systematically unrepresentative. They may be more likely to match with local firms, for example. And the world is complicated: at some level of influx, local resources and government services may struggle to cope.
Yet this paper suggests that we should remain sanguine in the face of evidence-free rhetoric about the “costs” and “risks” of newly arrived Syrians across Europe. It turns out that a large volume of new workers didn’t move the needle on local wages.
The findings should also give leaders in other European countries serious pause about the generosity of their own policies. If the same number of Syrians as a share of the population were to arrive in the UK as were in Turkey in 2013 (the end of the paper’s period of study), it would work out to about 360,000. That’s a lot more than the 20,000 over five years that David Cameron has seen fit to allow in so far.