Essays on climate change and labour in Türkiye

This thesis investigates the impacts of climate change on the Turkish economy, focusing on sectoral labour reallocation, agricultural productivity, and internal migration. In this context, the theoretical framework, data sources, and empirical analyses presented in three chapters are summarized below. The first empirical chapter analyzes the effects of climate change on the labour market in Türkiye, focusing on inter-sectoral reallocation and occupational skill groups. Based on a comprehensive micro-dataset constructed by merging TurkStat Labour Force Statistics Micro Data covering the period 2008–2021 with temperature and precipitation data from the Turkish State Meteorological Service, the analysis observes that rising temperatures significantly reduce agricultural employment while increasing employment in the services sector. The findings indicate that rising temperatures induce a labour reallocation from agriculture to services, whereas no statistically significant transition to the industrial sector is observed. Furthermore, the effect is found to be asymmetric; specifically, low-skilled and low-educated labour constitute the group most vulnerable to climatic shocks. The second chapter presents a simplified general equilibrium model to reveal the economic mechanisms behind the sectoral shifts observed in the first chapter. This theoretical framework, which centers on agricultural productivity dynamics, is calibrated using sectoral labour and output data for Türkiye covering the period 1998–2022. The model results confirm that climate-induced productivity shocks are a fundamental mechanism determining labour allocation by altering relative sectoral returns. Empirical analyses further support the model's theoretical predictions by confirming the strong negative relationship between heat stress and agricultural productivity. The third empirical chapter examines the impact of drought, the most prominent manifestation of the climate change in Türkiye, on internal migration dynamics. A gravity model is estimated using the Poisson Pseudo Maximum Likelihood (PPML) estimator, utilizing inter-provincial bilateral migration flows covering the 2008–2023 period and the high-resolution Standardized Precipitation-Evapotranspiration Index (SPEI). The analyses reveal that drought acts as a statistically significant driver of migration; this effect accelerates the structural transformation and urbanization process by displacing the population from agricultural peripheries to urban centers. Additionally, it is demonstrated that drought exacerbates migration indirectly with conflict acting as a mediator, alongside its direct impact. In summary, this thesis demonstrates through empirical and theoretical findings that climate change plays a critical role in structural transformation processes in Türkiye, extending from labour markets to internal migration. Finally, by documenting the heterogeneous effects and macroeconomic impacts of climate shocks, the thesis concludes with implications for policy-making and theoretical modeling as indicated by the findings.