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The impact of a Customs Union with the EU on internal migration in Turkey under the two alternative Harris-Todaro and wage curve settings

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  • De Santis, Roberto A.

Abstract

The impact on internal migration of the recent Customs Union (CU) agreement between Turkey and the European Union (EU) has been studied with an intra-industry trade Applied General Equilibrium (AGE) model with intersectoral capital mobility, under two alternative specifications for the labour market: the traditional Harris- Todaro approach and the existence of a 'wage curve' in the urban sector. The numerical results show that, under both specifications, the CU leads to migration from rural to urban areas, despite agriculture remaining protected; causes a reduction of the urban unemployment rate and the urban-rural wage gap as suggested by theoretical studies; whilst raises the capital rent, a counter intuitive result with respect to the dual economy literature. Both scenarios suggest that internal migration is economically desirable, as it would contribute to a large rise in welfare. The study also shows that the proposal of uniformly subsidising the entire labour market maximises welfare, but the possibility that the high wage union sector can cream off more rents, and the large amount of financial resources required, make this policy unfeasible. It might be thought that the results of this kind of exercise would be highly sensitive to the assumptions made about the labour market. One of the contributions of this paper is to demonstrate that that is not the case.

Suggested Citation

  • De Santis, Roberto A., 1998. "The impact of a Customs Union with the EU on internal migration in Turkey under the two alternative Harris-Todaro and wage curve settings," Kiel Working Papers 867, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:867
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    Cited by:

    1. Sylvain Chabe-Ferret & Julien Gourdon & Mohamed Ali Marouani & Tancrède Voituriez, 2007. "Trade-Induced Changes in Economic Inequality: Assessment Issues and Policy Implications for Developing Countries," Working Papers DT/2007/11, DIAL (Développement, Institutions et Mondialisation).
    2. repec:dau:papers:123456789/4331 is not listed on IDEAS
    3. Bayar, Ali. & Diao, Xinshen & Yeldan, A. Erinc, 2000. "An intertemporal, multi-region general equilibrium model of agricultural trade liberalization in the South Mediterranean NICs, Turkey, and the European Union," TMD discussion papers 56, International Food Policy Research Institute (IFPRI).

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    More about this item

    Keywords

    Customs Union; Internal Migration; AGE analysis; Turkey;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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