Epidemic Proportions

Sandra Rozo gathers thought leaders for first workshop on forced migration

September 21, 2018

A community of scholars studying forced migration gathered at USC Marshall School of Business to discuss from multiple perspectives the largest wave of refugees seeking shelter since World War II.

One thing they already know, said Sandra Rozo, USC Marshall assistant professor of finance and business economics: “The answer is not to close the door. That doesn’t solve anything. But neighboring countries don’t have enough resources to do everything – addressing the refugee crisis is the responsibility of the entire world.”

Addressing the refugee crisis is why Rozo organized “The Conference on the Impacts of Refugees in Hosting Economies.” Among the first academic workshops to comprehensively address the state of forced displacement of vulnerable populations, the event drew scholars from around the world to contribute to sessions covering the effect of forced migration on economic, political, and social change.

“This is the worst refugee crisis since World War II,” said Rozo. “We need to diagnose what’s happening. The workshop was a vehicle for jointly assessing the issues and trying to understand the impacts so we know how to act. After the Geneva Convention in 1949, a country can’t refuse entry. But how does it deal with the new population?”

Rozo’s work focuses on the impact of displaced populations on businesses, consumption decisions, and voting behavior. In one of her working papers, "Blessing or Burden? The Impact of Refugees on Businesses and the Informal Economy,"  with Onur Altindag and Ozan Bakis, she finds positive impacts on Turkish communities where Syrian refugees have relocated. “The media tend to focus on the negative but the effects of displaced populations cannot be generalized in one way or another,” she said. “We’re asking what the impacts are so we can ameliorate the negative and amplify the positive.”

“The answer is not to close the door. That doesn’t solve anything. Addressing the refugee crisis is the responsibility of the entire world."--Sandra Rozo, Assistant Professor of Finance and Business Economics

During the two-day workshop Sept. 14-15, topics included refugee impacts on labor markets, income and consumption, and non-labor market impacts on refugees. George Borjas of the Harvard Kennedy School opened the conference as keynote speaker, and Paolo Verme of the World Bank closed the meeting with a review of the empirical literature in economics.

Next Steps: More Research

Although economic and social research on forced displacement is moving quickly because of recent developments, Rozo said the outcome of the conference is even more investigation. “We need to learn more. Countries feel different impacts, refugees have different characteristics.  And, with global warming, displacement is not going to improve, it’s only going to get worse.”

In their study of the impact of displaced populations on business decision-making, Rozo and her partners focused on the resettlement of more than 3 million Syrian refugees in Turkey. The event lends itself to understanding impact because Syrian migration to Turkey was negligible before the civil war began in 2011. Since then, Turkey has experienced the largest involuntary migration shock observed in more than 50 years – the impact is measurable.

In addition, since the refugees largely settled in locations with a high share of Arabic speakers, the researchers could compare those areas to regions with few Arabic speakers. Finally, their sample provides a unique perspective on the economic performance of firms in a developing country where the refugee labor force predominantly works in jobs that are “informal,” or not regulated or protected by the government. The researchers were able to track them through labor supply data directly reported by workers.

“Our results suggest that the influx of refugees creates positive effects that are economically meaningful." --Sandra Rozo

Other data sources the researchers were able to examine include firms’ annual census data, labor-force surveys, business registrations, and trade statistics, as well as official population and migration figures. They found that local businesses are booming in the refugee-host areas in Turkey.

“Our results suggest that the influx of refugees creates positive effects that are economically meaningful,” said Rozo. “For example, a one percentage-point increase of refugees in the population boosted firms’ electricity and oil consumption by 4.3 percent. In addition, the number of new businesses increased, especially firms established by Syrian business owners collaborating with Turkish partners to tackle barriers to market entry.”

According to the study, these effects are entirely driven by small- and medium-sized firms. Construction, restaurant, and hotel industries benefit most, with growth concentrated in the informal economy.

Those who don’t benefit are native workers. Refugee populations not only change production and prices, they motivate firms to increase undocumented business practices. The arrival of refugees in the labor market decreases the informal employment of native workers as well as the number of hours they work. “Notably,” said Rozo, “those native workers also see their wages drop by 1.9 percent.”

She said refugee populations can cause growth, but the locals have to be considered. “Refugees bring change to various sectors in the economy with mixed results. Displaced populations also can have negative effects. We’re trying to understand how to address those.”