Bratsberg et al. (2018) provide evidence that migrants from less developed countries have more precarious jobs and are more exposed to the adverse consequences of firms’ bankruptcy and closure. Although displaced workers are the last hired and first fired and earn much less than natives, they may stay and work even longer during a crisis in the destination because conditions at home could be even worse. Danzer and Dietz (2018) find that Tajik workers stayed longer in Russia during the crisis of 2007-09, even though they earned less, became more exposed to illegal work, harassment, and deportation.

Turbulent economic conditions may also escalate social tensions between host and displaced communities by increasing competition over scarce resources. Given the lack of evidence for anti-refugee sentiments during a crisis, we refer to works on change in attitude toward migrants during bad economic times. Studies using European Social Survey suggest that the crisis of 2007-09 raised negative attitudes toward migrants, especially in countries more influenced by the crisis (Hatton, 2016; Isaksen, 2019; Turner & Cross, 2015). More recent papers explore the impact of the Covid-19 outbreak on the rise of negative attitudes towards migrants (Daniele et al., 2020; Dipoppa et al., 2021).

The papers focusing on displaced populations mostly struggle with scarce and unreliable data (Ruiz & Vargas-Silva, 2012). Refugees are normally excluded from household budget surveys, and the available data is mostly collected by humanitarian organizations without sufficient experience in measuring welfare and poverty (Verme, 2017). The scarcity of reliable data can explain the relative absence of refugees-related articles in the literature on the impact of economic shocks. However, the advantage of our paper is having access to the two national surveys conducted by the Statistical Center of Iran, the Labor Force Survey (LFS) and the Household Expenditure and Income Survey (HEIS), with a suitable coverage of Afghan refugees.

# **4. Research design**

In this section, we first describe data sources and the matching strategy. Then we explain the key variables and how they are constructed. Finally, we elaborate our identification strategy to assess the unequal impact of macro shocks in Iran on Afghan refugees and the host communities.

## **4.1. Data**

Our data is drawn from two surveys regularly conducted by the Statistical Center of Iran, the main governmental body to run sample surveys: the Labor Force Survey (LFS) and the Household Expenditure and Income Survey (HEIS). They both have nationwide and provincial representative samples of rural and urban households, and the latest quinquennial population census is used as their framework. As there is no camp for Afghan refugees in Iran, they spread over specific regions of the country, and the national household surveys have good coverage of them.<sup>4</sup> LFS has been conducted in the middle of each quarter since spring 2005 and is the primary source of employment statistics in Iran. The information available in LFS covers a wide range including household member’s demographic and employment status, such as education, migration, working hours, industry, occupation, and experience (but not wage and income). Importantly for this research, the nationality of each household member is also inquired in this survey. The sampling of LFS is on a rotating panel basis in the sense that each household is sampled in two consecutive seasons of two consecutive years. This feature enables us to observe each individual’s change in employment status and compare it between two communities. Table 1 lists the LFS rounds with the available sample of Afghan refugees.

HEIS has been conducted annually since 1963, but its raw data is available from 1984 onwards. Its enumeration is uniformly spread over the year such that in each month, a representative sample of households is surveyed. HEIS covers a variety of information on household demographics, facilities, and income, together with a detailed questionnaire on expenditure items. In contrast to LFS, the HEIS

> 4 Since 2004, Afghan refugees are forbidden to stay in specific provinces, mainly near borders of Iran, but there is no other legal restrictions for their stay or movement in Iran.

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