average for both low skilled and high skilled native workers. The point estimates do not vary much between the full control sample and the matched control samples. The reduced form and 2SLS regressions are also robust to broader or narrower definitions of the treatment shock (i.e. commuter zones with refugee inflows larger than 0.05% or 0.2% of the population) and the omission of some controls. They note that the average refugee inflow was not large, and that the different skill-set of resettled refugees compared to natives might have led to a high complementarity between the two groups.

# 2.2 Middle-income countries

# Returnees from Angola and Mozambique to Portugal

After the 1974 military coup, the newly installed government of Portugal granted independence to Angola and Mozambique generating a flow of “retornados” (returnees), people of Portuguese or European descent who felt unsecure in the former colonies and decided to return to Portugal. Prior to 1974, the population of Portugal was decreasing due to emigration whereas it grew by 5 percent per year in 1974 and 1975. Estimates of the total number of returnees during the period vary between 0.5 and 1m people but many returnees moved on to other countries. According to the census, there were about 0.5m returnees in 1981, predominantly working age males formerly engaged in service activities, and relatively well educated as compared to the local population. Together with returning soldiers, they increased the Portuguese labor force by over 15 percent in three years.<sup>30</sup> Most of them were native Portuguese speakers. They arrived with few resources but received benefits, including cash subsidies, which made up about 11 percent of total government spending at the time (Makala 2017). Compared to France, who received a comparable returnee flow from Algeria, Portugal was less developed at the time, and the economy was in a downturn.

Two published studies looked at the impact of these returnees on the local labor market. Carrington and de Lima (1996) used time series econometrics to observe the evolution of the Portuguese labor market before and after 1974. They find a sharp deterioration of labor market indicators after 1974. However, the immigration rate had no impact on the unemployment rate, the employment to population rate or wages except for a small one year lagged effect on the unemployment rate and real wages. Interestingly, these results hold whether the authors control for Portuguese macroeconomic indicators or the Spanish labor market, which had similar characteristics to the Portuguese labor market in the 1970s. Using a separate longitudinal model and focusing on the construction sector, the same authors find a large and significant effect on earnings in this sector. However, the authors’ challenge their own results considering the unobserved heterogeneity that affects the latter model leaving conclusions somewhat open to interpretation. They also argue that the persistence of the effects raises question if the returnees were the cause.

Makela (2017) uses a SCM approach based on comparator countries (see empirical models section) to estimate the impact of the returnees on average annual productivity, wages and the unemployment rate. The author finds a significant negative effect of immigration on all three outcomes. The estimate impact on productivity is around 26 percent in the five years after the shock, the one on wages is from 8 up to 55 percent from 1977 to 1985 whereas the unemployment rate rises by about 2.3 percentage points between 1975 and 1980 but declines by a similar amount between 1980 and 1985. The author also combines the SCM approach with a Difference approach working with Portuguese regions rather than countries and focusing on the agriculture and construction sectors. In addition, a fixed effects and and a generalized synthetic control method are used as robustness tests. All these estimations are consistent in finding a significant negative effect on agricultural and construction wages. On average, a one percentage increase in the returnees population share leads to a decrease in wages of 4.13-9.53 percent in these sectors.

> 30 It should also be noted that the emigration of Portuguese guest workers ended in 1973 with the oil crisis. This added to the labor supply shock caused by the returnees from the former colonies.

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