Two and a half million Syrian refugees, tasks and capital intensity

Official URL: http://dx.doi.org/10.1016/j.jdeveco.2020.102470

We investigate how the rapid increase in the low-skilled labor supply induced by the inflow of 2.5 million Syrian refugees changed the tasks performed by native workers and the capital intensity of firms in Turkey. We use both survey and administrative data to estimate the effects. The results based on the Labor Force Survey suggest that the inflow of refugees increased natives' task complexity, reducing the intensity of manual tasks, and raising the intensity of abstract tasks. This effect is driven by highly educated and young natives. Exploiting the administrative firm data that contains the entirety of firms in the country, we find that manufacturing firms reduced their capital intensity and investments. Reduction in capital intensity and investment is largely driven by smaller sized firms. We conclude that tasks provided by Syrian refugees are substitutes for manual tasks and capital inputs, and complements to more complex tasks.