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Keywords:

  • Higher education;
  • Unemployment;
  • ARDL;
  • Granger Causality;
  • Turkey

This article analyses the short and the long-term relations between higher education and unemployment in Turkey for the period 1960–2007. It chooses the recently developed ARDL cointegration and Granger causality of Dolado and Lütkepohl (1996) methods. While the proxy of unemployment is total unemployment rate, higher education graduates were chosen to represent higher education. The cointegration and error correction analysis show that higher education is one of the factors which increases the unemployment rate both in the short and the long-run in Turkey. In addition, findings of causality analysis reveal that there is a bi-directional causality between higher education and unemployment and support evidence in favour of Plümper and Schneider (2007)'s theory. Overall, the study concludes that, if governments wish to benefit optimally from the higher education graduates in Turkey, they should not invest more in higher education than the economy needs.