Higher Education and Unemployment in Turkey: Regional Panel Analysis with Undergraduate, Master's, and PhD Perspectives

Abstract

In the past two decades, Turkey has experienced a noteworthy increase in the establishment of universities and enrollment of students across various degree programs. However, this surge in higher education has been accompanied by a growing number of unemployed higher education graduates. To address this phenomenon, this research conducts a comprehensive analysis of the relationship between different levels of tertiary education, undergraduate, master's, and Ph.D. (Doctorate) and unemployment. The study utilizes TurkStat's regional database, covering data from 26 provinces in Turkey spanning the years 2008 to 2021. Prior to delving into coefficient analysis, the Dumitrescu and Hurlin (2012) panel causality test was applied to identify the direction of potential causality and to establish an accurate model. The findings suggest a potential causal relationship running from being a higher education graduate, at all levels (bachelor's, master's, and PhD ), to unemployment rate. Subsequently, to further scrutinize this relationship in light of causality findings, the Panel Augmented Mean Group estimator (AMG) was employed. The results indicate that a 1% increase in the total number of Bachelor's degree graduates is associated with a 1.16% increase in unemployment rate. Based on these findings, it can be argued that, instead of further investing in higher education, a policy approach targeting middle-skilled jobs through advanced investment in vocational high schools may be more cost-effective.