Does Globalization Reduce Youth Unemployment? Augmented ARDL Approach

Abstract

While unemployment is a significant issue that has been extensively discussed in economic literature for decades, it is one of the key indicators that governments and firms consider. In fact, reducing unemployment in a country contributes to both increasing social welfare and economic welfare. Fluctuations in unemployment figures during the globalization process have led researchers to prioritize this issue. The objective of this study is to ascertain the impact of globalization on youth unemployment in Türkiye over the period 1988–2021, utilizing the augmented ARDL approach. The KOF Globalization Index, a frequently utilized indicator in the literature, is selected to represent globalization. However, the study is limited by the fact that the most recent data from the KOF index belongs to 2021, and the data on youth unemployment began in 1988. The limited number of studies on the relationship between globalization and youth unemployment in Türkiye constitutes the starting point of this study. The findings of the study indicate that an increase in globalization in the long run decreases youth unemployment in Türkiye. Furthermore, economic growth, inflation, and foreign direct investments also decrease youth unemployment, while an increase in urbanization increases youth unemployment. In addition, if a deviation occurs in the short run, approximately 85% of these deviations disappear in the first period and converge towards the long-run equilibrium.

Keywords

• küreselleşme
• genç i̇şsizlik
• genişletilmiş ardl
• globalization
• youth unemployment
• augmented ardl