Immigration, growth and unemployment nexus: a long-run analysis for Türkiye

Abstract

This study employs VECM, FMOLS, DOLS, and CCR methods to comprehensively explore the diverse effects of total immigration, including regular, irregular, and refugee movements, on unemployment in Türkiye from 2000 to 2022. Model 1 analyzes the overall influence of immigration, revealing a quadratic relationship wherein immigration initially reduces unemployment before triggering subsequent growth. Notably, the study identifies a rise in GDP per capita following increased unemployment linked to immigration, attributed to a surge in refugees, especially post-2013. Refugees, with their informal employment contributions, are seen as positively influencing economic growth, but at the expense of higher unemployment rates. Conversely, Model 2 dissects the effects of regular and irregular immigration, coupled with economic, educational, and inflationary factors, on unemployment. The analysis discerns that irregular immigration heightens unemployment, while regular migration alleviates it. A significant proportion of regular immigration comprises short-term and student permits, contributing positively to economic development and mitigating unemployment. Irregular migration, akin to refugee influx, fosters economic growth through informal employment, adversely impacting formal unemployment rates. The model also reveals a negative association between education and unemployment, emphasizing that heightened education levels lead to skill development and reduced unemployment. Additionally, the study notes the simultaneous rise in unemployment and inflation, potentially linked to informal employment resulting from immigration.