Blessing or burden? Impacts of refugees on businesses and the informal economy

We study the impact of the sudden arrival of more than three million Syrian refugees in Turkey on Turkish businesses. Our empirical methodology exploits the annual variation in refugee outflows from Syria and geographic concentrations of Arabic-speaking communities in Turkey, which date back to the rupture of the Ottoman Empire after World War I. Using yearly firm census data from 2006 to 2015, we document that refugee inflows induced a positive impact on the intensive and extensive margins of firm production. The effects were stronger for smaller firms and for firms operating in the construction and hospitality sectors. Increased informal activity by firms drove most of these changes. •Refugee inflows induced a positive impact on the intensive and extensive margins of firm production.•The effects of refugee inflows are concentrated on smaller firms.•The effects are stronger for firms that operate in the construction and hospitality sectors.•The effects of refugee inflows are largely concentrated in the informal economy.