Modelling Turkish Migration to Germany

This study develops a time series model of Turkish migration to Germany for the period 1963-2004 using the cointegration technique. A single cointegrating relation between the migration flow variable and the relative income ratio between Germany and Turkey, the unemployment rates in Germany and Turkey, and the trade variable, that captures intensity of bilateral economic cooperation, is found. By including the trade variable in the empirical migration function we investigate whether trade and migration are complements or substitutes: a question on which the theoretical literature does not provide a definite answer. Our results support the former view.Migration, trade, economic development, cointegration

The Role of Remittances in Migration Decision: Evidence from Turkish Migration

In this study we analyse the impact of workers' remittances on the decision to migrate by means of cointegration analysis. In traditional migration theories, especially in human capital models, the decision to migrate is based upon comparison of expected future incomes in the sending and the receiving countries adjusted for the cost of migration. By contrast, the new economics of labour migration suggests that the migration decision is made jointly by the migrant and his family. One important element of this theory is the role of remittances that is absent in traditional migration theories. In this paper we test traditional migration theories against the new economics of labour migration. The study covers the Turkish migration to Germany over the period 1964-2004. A single cointegrating relation between the migration inflows and the relative income ratio between Germany and Turkey, the unemployment rates in Germany and Turkey, the trade intensity variable, and workers' remittances (relative to Turkish GDP) is found. We find workers' remittances to be significant in explaining migration both in the short- as well as in the long-run.Migration, trade, remittances, the new economic of migration, cointegration

Spurious correlation in estimation of the health production function: A note

In this paper, we address the issue of spurious correlation in the production of health in a systematic way. Spurious correlation entails the risk of linking health status to medical (and nonmedical) inputs when no links exist. This note first presents the bounds testing procedure as a method to detect and avoid spurious correlation. It then applies it to a recent contribution by Lichtenberg (2004), which relates longevity in the United States to pharmaceutical innovation and public health care expenditure. The results of the bounds testing procedure show longevity to be linearly related to these two factors. Therefore, the estimates reported by Lichtenberg (2004) cannot be said to be result of spurious correlation, to the contrary, they very likely reflect an effective relationship, at least for the United States.Health; Life expectancy, Innovation, Pharmaceuticals, Health care expenditure, Cointegration

Spurious correlation in estimation of the health production function: A note

In this paper, we address the issue of spurious correlation in the production of health in a systematic way. Spurious correlation entails the risk of linking health status to medical (and nonmedical) inputs when no links exist. This note first presents the bounds testing procedure as a method to detect and avoid spurious correlation. It then applies it to a recent contribution by Lichtenberg (2004), which relates longevity in the United States to pharmaceutical innovation and public health care expenditure. The results of the bounds testing procedure show longevity to be related to these two factors. Therefore, the estimates reported by Lichtenberg (2004) cannot be said to be result of spurious correlation, to the contrary, they very likely reflect an effective relationship, at least for the United States.Health; Life expectancy; Innovation; Pharmaceuticals; Health care expenditure; Cointegration

Migration-induced women’s empowerment : the case of Turkey

Migration not only contributes to development through financial remittances, but also through flows of knowledge and through the diffusion of social, cultural and political norms and values. In fact, these more intangible contributions are more appreciated during economic and financial crises, as financial remittances become unstable or decrease in those circumstances. This paper, therefore, addresses the effect of migration on women’s empowerment in Turkey. The number of women in parliament in Turkey is chosen as a gauge of women’s empowerment and is explained by the emigration rate, the relative education of women to men, and a measure of democracy. Utilization of data over six decades from 1960 until 2011 gives the possibility that these series can be spuriously correlated. Therefore, the paper addresses the issue of spurious correlation in an analytical way. Spurious correlation is the risk of linking the share of women in parliament, for example, to the emigration rate when in fact there is no association. This study adopts the bounds testing procedure as a method to determine and to avoid spurious correlation. The results of bounds testing gives clear-cut evidence that women’s empowerment, the share of women in parliament in the present context, is related to the emigration rate, the relative education of women and to a measure of democracy. The bounds-testing procedure is replicated for emigration flows by destination country groups such as European and other core OECD countries, Arab countries, and Russia and CIS (Commonwealth Independent States) countries. Again, it is found that the share of women in parliament is related to the country groups with the largest effect in European and core OECD countries. The results are robust for the inclusion of asylum seekers and refugees in the emigration data. These results have important policy implications for sending as well as for destination countries, implications which are discussed in the paper

Turkish consumption and saving

The principle aim of this thesis is to construct a consumption function for Turkey for policy analysis using the annual State Planning Organisation (SPO) time-series data. This study commences from 1962 and extends until the end of 1994, when a financial crisis occurred in Turkey. It attempts to analyse not only the decline in the private savings rate during the first half of the 1980s, but also the significant rise from 1986 onwards. The thesis starts with an introduction which explodes the main research objectives, considers the existing consumption theories and extentions, records the main data features to be explained, briefly overviews the modelling strategy and discusses the basic considerations of the research and gives the structure of thesis. A literature survey on the theory of consumption is given in Chapter 2. The LifeCycle/ Permanent-Income hypothesis is considered as central to the two mainstream approach. : the Euler approach and the solved-out approach. These approaches are further extended by considering uncertainty and precautionary saving, credit restrictions, saving and leisure. habit or costs of adjustments and the durability of goods, the role of assets and asset prices. financial liberalisation and demographic factors. Finally, comparisons between the two approaches arc made in the conclusion of that chapter. Theory can deliver concepts with permanent relationships in economics, but it should be supported by empirical findings, since theory alone is insufficient to determine the actual economic relationship. Hence, Chapter 3 focuses on theoretical and appl ied modelling issues to construct a theory-consistent, congruent and encompassing consumption function. Congruency implies that the empirical model matches the available evidence in al l measured attributes (i.e., it is consistent with the theory from which it was derived, has unexplained components that arc innovations against available information, has basic parameters that are constant, is data admissible, and where any conditioning variables are weakly exogenous for the parameters of interest). Encompassing denotes that the model of interest can account for the result of rival models of the same phenomena. I also define structure as the set of invariant features of the economic mechanism. A parameter can be structural only if it is invariant for an extension of the sample period (constant), is invariant with respect to changes elsewhere in the economy (regime shifts), and is invariant over extensions of the information set (adding more variables). Chapter 4 examines the small-sample properties of the statistical methods used by means of Monte Carlo simulations. The informativeness of the data is investigated in an unrestricted Vector Auto-regression (VAR) with small-samples of noisy data combined with a high real growth rate and nominal inflation. This is to see how the relative drift dominates in explaining the informativeness of the data. The Monte results are summarised by using response surfaces to relate the biases to sample size. The ratio of standard deviations to standard errors in each equation is also analysed. The strong impacts of the system error variances in these response surfaces indicate the importance of high variances in VA Rs. Furthermore, I found noise, and a function of the signal to noise ratio. and cross-equation correlation had a large impact, but less effect from the relative drift. Chapter 5 presents an overview of the Turkish Economy, particularly during the sample period. by pointing out the lessons to be drawn from the stabilisation experiments and their effect on the private sector saving decision in Turkey. The aim of Chapter 6 is to get nominal housing wealth and housing price data from the available data, such as the nominal private disposable income. nominal private investment in the housing sector and the consumer price index, since housing wealth is claimed to be a major determinant of private savings in Turkey. Chapter 7 aims to reveal the problems of Turkish data by analysing the history of the Turkish a1ional Accounts to construct a data-base for estimating a consumption function for Turkey. GDP by expenditure is constructed from five different sources. Turkish accounting residuals are allocated by applying the linear regression approach. The results show that GDP-by-output is more reliable than the GDP-by-expenditure measure for Turkey. Chapter 8 is devoted to the time series modelling and evidence. Previous findings on consumption for Turkey have been formulated using conventional econometric techniques with a static estimation methodology within the Permanent Income Hypothesis (PIH). I adopted the equilibrium correction model (ECM) solved-out consumption function approach and tried to incorporate the effects of age. precautionary behaviour in the case of uncertainty, credit constraints, habits or costs of adjustments. and the durability of goods for developing belier understanding of private sector savings behaviour in Turkey. The modelling is based on the dynamic econometric methodology that involves the estimation of a general unrestricted model (GUM). a co-integration and long-run analysis, and the simplification of the GUM to a parsimonious dynamic model that is deduced by applying a sequential testing procedure. The final model is congruent: It matches the available evidence in all measured attributes and forecasts well, has white noise errors and constant parameters, and encompasses the VAR model equation as well as other specifications in previous models. Moreover, the model has a structural interpretation. The results of the final model reveal strong positive effects of the real interest rate. inflation and inflation uncertainty, a strong negative effect of population aged 15-44, a positive effect after one lag period of the change in the average propensity to consume. which represents the effects of expectations, habits or adjustment costs, in addition to the significant effect of the inverse of per capita Private Disposable Income and the change in housing wealth to income ra1io on the private average propensity to consume in Turkey. These findings offer an explana1ion for the salient features of the Turkish consumption pattern observed from 1he lime series data. These results also provide some policy implications such that inOation control should be strengthened and improved for consumption stabilisation. Furthermore. interest rate policy also has an important role to play in the savings process in Turkey. The research on small-sample properties of 1hc statistical methods by means of Monte Carlo Simulations strengthens the results of the empirical model. These. confirm the poor determination of intercepts in I(I) VARs, and the corresponding advantages of an equilibrium correction model formulation. Furthermore. the insignificance the of irrelevant dynamics should encourage model builders to use a dynamic econometric methodology to develop parsimonious models, such as used for building a consumption model for Turkey in this thesis.</p

Trade, aid, remittances and migration

I investigated whether migration is interrelated with trade, aid and remittances so that any policies that consider trade, aid and remittances also affect the decision to migrate. We developed and estimated an empirical model of Turkish migration to Germany and tested the model for the 1969-2004, using the cointegration technique. A single cointegrating vector is found among the gross migration inflows and the following explanatory variables: the relative income ratio between Germany and Turkey, the unemployment rates in Germany and Turkey, aid, the trade intensity variable and the ratio of manufacturing exports with Germany to total exports with Germany and remittances as a ratio of Turkish GDP. The results of this study show that migration, trade, aid and remittances are interrelated, however, migration will be better managed when the dynamic gains from trade and aid are considered. Hence, the broad-based and rapid economic development with increase in income is the only effective means of reducing migration pressures in a labour-surplus country. This is mainly because the income differential is the most significant factor in determining migration flows