The Impact of Free Zones on Structural Unemployment in Turkey

Date

2025-7

Author

Özorun, Saadet

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This thesis focuses on exploring the effects of free zones in Turkey and their impact on structural unemployment. In the modern, technologically advanced economy, free zones are crucial in attracting foreign direct investment and job creation. Although the early results in Turkey were not very high, free zones were implemented in 1980 to promote export-driven development and employment. To answer the research question on the effects of free zones on structural unemployment in Turkey, the study employs an unbalanced panel data model from 2013 to 2023. The dependent variable, structural unemployment, is obtained using the Hodrick-Prescott (HP) Filter. Important independent variables are volumes of trade within free zones, the number of firms, and the number of operating licenses. Control variables involve regional education levels, GDP, and net migration rates. The econometric methods used are fixed effects, panel unit root tests, and generalized method of moments (GMM). Results indicate that the volume of trade and the number of running licenses have substantially reduced structural unemployment. Conversely, the total number of firms does not make a significant difference. Education level continuously decreases structural unemployment, whereas in some models, net migration raises levels of structural unemployment. These results confirm that structural unemployment is present, with education and regional GDP identified as robust predictors. Overall, the paper concludes that the impact of free zones in Turkey on structural unemployment is indirect yet significant. To maximize the effect of education and labor market policies, it is necessary to strengthen them.

Subject Keywords

Free Zones, Structural Unemployment, HP Filter

URI

https://hdl.handle.net/11511/115146

Collections

Graduate School of Social Sciences, Thesis