Abstract

This paper investigates the degree to which immigration shock to a  region propagates through supply chains. This is the first paper that  studies the propagation of labor supply shocks across regions through  firm-to-firm trade. Using the unexpected arrival of Syrian refugees  densely concentrated in border regions of Turkey, we estimate how  firms throughout the country are affected in terms of their sales,  employment, and productivity. We also estimate the effect of the shock  on interprovincial trade, focusing on trade volume and network  formation. The results point to positive spillover effects of  immigration for firms with pre-existing links to Syrian  refugee-hosting regions through
upstream and downstream linkages. We also find evidence for increased  trade volume and network expansion through new trade linkages.