Fiscal Effects of the Refugee Migration on the Asylum Country: Evidence from Türkiye, World’s Leading Refugee Host Country

This study aims to investigate the impact of refugee migration on Türkiye's fiscal situation using data from 1972 to 2023. For this purpose, the refugee population, government expenditures, and tax revenues are used for the analysis. To ensure robust estimation results, real GDP and trade openness variables are incorporated as control variables. Employing the NARDL model, the analysis reveals that an increase in the refugee population leads to an increase in government expenditures while a decrease in the refugee population results in a decrease in government expenditures. Moreover, the rise in the refugee population in Türkiye has resulted in a decline in tax revenues and a decrease in the refugee population leads to an increase in tax revenue that can be explained by the exploitation of refugees as cheap labor and the subsequent surge in the informal economy. Therefore, this study argues that it is necessary to increase legal sanctions and inspections on unregistered employment to prevent the decrease in tax revenue and exploitation of refugees caused by the increase in Türkiye’s refugee population.