Journal of Population Economics

, Volume 29, Issue 3, pp 657–686

Immigration and prices: quasi-experimental evidence from Syrian refugees in Turkey

Original Paper

Abstract

We exploit the regional variation in the unexpected (or forced) inflow of Syrian refugees as a natural experiment to estimate the impact of immigration on consumer prices in Turkey. Using a difference-in-differences strategy and a comprehensive data set on the regional prices of CPI items, we find that general level of consumer prices has declined by approximately 2.5 % due to immigration. Prices of goods and services have declined in similar magnitudes. We highlight that the channel through which the price declines take place is the informal labor market. Syrian refugees supply inexpensive informal labor and, thus, substitute the informal native workers especially in informal-labor intensive sectors. We document that prices in these sectors have fallen by around 4 %, while the prices in the formal labor-intensive sectors have almost remained unchanged. Increase in the supply of informal immigrant workers generates labor cost advantages and keeps prices lower in the informal labor-intensive sectors.

Keywords

Immigration Consumer prices Syrian refugees Natural experiment Informal employment 

JEL Classification

C21 E31 J46 J61 

Supplementary material

148_2016_583_MOESM1_ESM.docx (20 kb)
(DOCX 24 KB)

Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Research and Monetary Policy DepartmentCentral Bank of the Republic of TurkeyAnkaraTurkey
  2. 2.IZABonnGermany

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