Effect of Refugees on the Components of Economic Misery: An Empirical Analysis ofTop Refugee-Hosting Countries

Büyükakın F., Bayraktar Y., Özyılmaz A.

in: River Flowing North Migration Generating Geographies and International Irregular Migrations, Prof. Dr. Suat KOLUKIRIK and Res. Asst. Elif GÜN, Editor, Peter Lang Publishing, Inc., Berlin, pp.319-335, 2020

  • Publication Type: Book Chapter / Chapter Research Book
  • Publication Date: 2020
  • Publisher: Peter Lang Publishing, Inc.
  • City: Berlin
  • Page Numbers: pp.319-335
  • Editors: Prof. Dr. Suat KOLUKIRIK and Res. Asst. Elif GÜN, Editor
  • Istanbul University Affiliated: Yes


Refugees are one of the major problems for both developed and developing

countries. Currently, with the influence of the Arab spring, one of the biggest refugee

crises is experienced. The forced displaced population, which was 43.3 million

in 2009, increased to 70.8 million in 2018, reaching a record level. Most of

this increase consist of civil wars and conflicts in Syria between 2012 and 2015.

Besides, in this increase, conflicts in countries such as Iraq and Yemen in the

Middle East, Democratic Republic of Congo and South Sudan in Sub-Saharan

Africa play an important role (UNHCR, 2018).

In 2018, forced displaced refugee population reached approximately 13.6 million

people. While one-third of the refugees (6.7 million people) are in the least

developed countries, only 16 % of the refugees are in the developed countries.

According to 2018 data, Turkey ranks first among top refugee-hosting countries

with 3.7 million people and this is followed by Pakistan with 1.4 million and

Uganda with 1.2 million, respectively. In the share of refugees in the country’s

population, Lebanon, where one out of every 6 people is a refugee, ranks first,

Jordan ranks second with 1/14 of the population, and Turkey ranks third with 1/22

of the population (UNHCR, 2018). The refugee population in Turkey continues

to grow and has reached 3.6 million Syrians and approximately 330,000 refugees

and asylum-seekers of other nationalities by the year 2020 (UNCHR, 2020).

Refugees affect host countries in many ways. Especially in countries where

refugees are concentrated, they compete with the local citizens for scarce resources

such as water, food, land, housing, and medical services. They can cause

depress wages and inflationary pressures in many products (UNCHR, 1997). For

this reason, it can be said that there is negative point of view toward refugees

especially in these societies. Although the general perception is that refugees affect

the economic life negatively, in fact they also contribute to the economies of

the host country in many ways; because refugees can contribute to the recovery

of the economy both as entrepreneurs and consumers. For example, Akgündüz et al. (2018) argued that Syrian refugees in Turkey increase firms’ profits and

sales, the number of companies with foreign capital has increased with them.

In sociocultural concerns, there is an opinion that refugees will harm social

harmony in most societies. In this context, Schmeidl (1997) emphasized in her

study that with the arrival of refugees or immigrants in Peshawar Pakistan, local

property owners benefited from this, but low-income local people had difficulty

paying rising housing rents. With the addition of foreign aid to refugees, inequalities

between the poorest part of society and refugees have begun to increase and

this leads to social tensions. But according to Fajth et al. (2019), cultural conflicts

may occur at the first stage; however, over time, host communities and refugees

may establish close social relationships, and they can live in more peaceful and

more humane relationships.

Refugee policies of the countries differ; refugees continue to live in more

humane conditions in some societies, and in some societies, they may be

exposed to social lynching. For example, refugees in Turkey, which home to

the world’s largest refugee, has many possibilities. Less than 2 % of refugees live

in Temporary Accommodation Centers, others live in urban, periurban and

rural areas with local people in Turkey. Refugees have legal work permits since

2016 in Turkey. Nevertheless, Syrians who work as cheap labor in illegal ways,

especially in industry, agriculture and small firms, have a significant impact on

the employment of local people. Although Turkey has the largest number of

refugees in the world, the country’s approach to refugees is generous and positive;

and provides refugees access to health care, education and social services.

To strengthen interaction between refugees and host communities; government,

municipalities, imams and mukhtars work in cooperation. In addition, Turkish

courses are given to refugees through Public Education Centers to solve the

language problem (UNCHR, 2020; ORSAM, 2015). In Jordan, with the Jordan

Convention between the European Union (EU) and Jordan, Syrian refugees have

been given the opportunity to work legally in certain sectors such as agriculture,

construction, food and manufacturing (Razzaz, 2017). Despite civil society

and international assistance, Bangladesh faces difficulties in providing refugee

shelter, food, water and sanitation, clothing and fight against diseases that occur

in refugee camps; and most of the refugees live in camps with terrible humanitarian

conditions. (László, 2018; Mohammad 2012). Uganda’s refugee policies

differ from many countries. For example, refugees can reside anywhere in the

country, and they can be legally employed. Refugee children also have similar

rights as citizens of the country in accessing pre-school education and primary

education. On the other hand, in some regions, arable land support is provided for refugees. Refugees spend much more effort on their land than host country

farms, and they get bigger crop for each unit (Taylor et al. 2016).

Unemployment and inflation are two macroeconomic variables that are

important in the local people’s approach to refugees. In the local workforce, the

feeling that their work is being taken away increases racism and nationalism. As

a result, the risk of conflict between refugees and local citizens increase (Kaygısız,

2017). At this point, host refugee-countries’ rapidly and effectively regulating

job opportunities for refugees will contribute to reducing these conflicts. In this

context, countries need to evaluate labor markets at the national, regional or

local (municipal) level. For example, what skills and qualifications are needed

in the host refugee-countries or in which region or municipality is there a labor

shortage? Such problems should be identified, and solution models should

be developed according to country conditions. Thus, employment opportunities

can be effectively coordinated for both refugees and the local citizens

(Hendow, 2019).

As it is known, the main components of the economic misery index are the rate

of inflation and unemployment. Individuals follow these two variables closely

and react rapidly to the change of these variables. When the rate of inflation

and unemployment increases, economic dissatisfaction increases. Therefore, the

impact of refugee flows on inflation and unemployment, which led to economic

misery, has been the subject of this study. In this context, the effect of refugees on

unemployment and inflation was analyzed using fixed effect quantile regression

method for the period of 1992–2017 in top refugee-hosting countries (Turkey,

Pakistan, Jordan, Lebanon, Iran, Kenya, Bangladesh, Sudan, Uganda, Tanzania

and Chad). In the second section, following the introduction, the literature is

discussed with transfer channels; in the third and fourth section, data, model

and analysis results are presented.