Faculty of Arts and Social Sciences
How Smart are Smart Sanctions? Spillover Effects of Financial Sanctions on Commodity Markets
Murat Güray Kırdar
October 10, 2018, 13:15
We estimate the effects of the arrival of 2.5 million Syrian migrants in Turkey by the end of 2015 on the labor market outcomes of natives using a difference-in-differences IV methodology. We show that relaxing the common-trend assumption of this methodology—unlike the recent papers in the same setting—makes a substantial difference in several key outcomes. Despite the massive size of the migrant influx, no adverse effects on average wages of men or women or on total employment of men exist. For women, however, total employment falls—which results mainly from the elimination of part-time jobs. While the migrant influx has adverse effects on competing native workers in the informal sector, it has favorable effects on complementary workers in the formal sector. Migrants and native men in the informal sector are highly substitutable—we estimate about one-to-one replacement in employment. On the other hand, both wage employment and wages of men increase in the formal sector. These findings, along with those on the heterogeneity in effects by age and education, are very much in line with the canonical migration model. In addition, a rise in prices in the product market and a rise in capital flow to the treatment regions contribute to the rise in labor demand in the formal sector.