selection effects (due to the refugee inflow) and a residual that reflects changes in marginal products (and unobservables). Entirely consistent with the impact on employment we find that the residual wage (marginal product) change was negative, large and statistically significant for the informal sector, women and low education Turkish (and close to zero for all other groups). At the same time there were very large composition effects. With lower productivity workers dropping out of the labor force selection resulted in average wage increases in the informal sector and for women, despite the fall in marginal products. Accounting for these compositional changes is essential for identifying changes in the actual earnings potential in different sectors (formal and informal) and for different groups of natives (by gender, age or education).

The fact that we find large displacement effects due to an inflow of refugees provides a contrast for much of the voluntary immigration literature, which typically finds very modest impacts (positive and negative). It is worth recalling though that unlike most voluntary immigration flows the arrival of Syrian refugees was (i) relatively sudden and (ii) not driven by the availability of jobs in Turkey. Hence, it is unsurprising that – at least in the short-run – the impact is more negative than is the case for host countries of voluntary migrants. The results are, however, very much aligned with recent work on voluntary migration flows driven by push factors. Glitz (2012) analyzes ethnic German migration from Eastern Europe and the former Soviet Union to Germany after the end of the Cold War, Aydemir and Kirdar (2013) the arrival of ethnic Turks from Bulgaria in 1989, and Dustmann, Schönberg and Stuhler (2015) the impact of Czech day migrants to Germany. All three papers find displacement effects of a comparable magnitude to ours (and even larger).<sup>7</sup> Particularly closely related to this paper is Ceritoglu et al. (2015), which also addresses the impact of Syrian refugees on the Turkish labor market.<sup>8</sup> The paper uses earlier data, from 2012 and 2013, and a difference-in-difference strategy. It argues that since the refugee flows

> 7 The classic Card (1990) Mariel boatlift paper did not find displacement (or wage) effects. An issue that has given rise to recent controversy, see Borjas (2015, 2016) and Peri and Yasenov (2015). Early work by Hunt (1992) and Carrington and De Lima (1996), who study the impact of the repatriates from the African colonies to France and Portugal respectively, and Braun and Mahmoud (2014), looking at expelled ethnic Germans, and Calderon-Mejia and Ibanez (2015), on internal displacement in Colombia, also find negative effects on employment and wages

> 8 The other concurrent work on the same topic is Akgunduz, van den Berg and Hassink (2015a), who find no evidence of labor market impacts. The paper has since been revised and renamed, Akgunduz, van den Berg and Hassink (2015b), with an interesting focus on firm dynamics in response to the arrival of refugees. The paper no longer includes employment outcomes. They find increasing firm entry in provinces hosting refugees (and no increase in firm exits), which helps explain our finding that the arrival of refugees encourages formal job creation.

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