The Turkish economy is sensitive to geopolitical developments due to its geographic location and proximity to the Middle East and North Africa, where tensions are generally high. One of the most recent events is the civil war in the neighboring Syria, which began in early 2011. This war had a significant impact on the Turkish economy. In addition to the massive influx of Syrian refugees, the war had economic repercussions because it led to a political crisis with Russia. Russia and Türkiye were involved in the Syrian civil war, supporting rival parties and Türkiye shot down a Russian warplane on November 24, 2015. In response, Russia announced a package of economic sanctions including some restrictions on bilateral tourism activities. As an important trading partner of Türkiye, these sanctions had profound impact on the Turkish economy, particularly on the tourism sector. We use a rich set of establishment-level micro data and a difference-in-differences framework to examine the impact of the Russian sanctions on employment and wages. Our results show that establishments located in provinces preferred more by Russian tourists experienced a sharp decline in employment (measured by the number of days worked) and total wage payments, while the decline in the average wage rate of these establishments was limited.

This study examines the impact of domestic outsourcing on the wages of workers performing outsourced tasks in Türkiye, using an administrative employee-employer linked dataset. Outsourcing events are identified by tracking worker flows across firms with specific properties. Unlike existing studies, our dataset incorporates buyer-supplier transactions, enabling us to confirm that a relationship between the predecessor and successor firm begins following the outsourcing event. This improves our ability to identify outsourcing events, which we use to explore wage effects of both high-skilled and low-skilled outsourcing. Our findings indicate that low-skilled workers experience wage losses from domestic outsourcing, while high-skilled, professional workers benefit, suggesting that domestic outsourcing may be one of the factors contributing to rising wage inequality.