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Abstract
Despite only recently completing the challenging fifth enlargement process, the EU has already embarked upon negotiations about Turkey’s possible accession to the EU; indeed in December 2004 agreement was reached between Turkey and the EU for entry talks to begin in October 2005. The possibility of Turkish accession to the EU has reignited fears in the ‘old’ EU about labour migration as a result of enlargement. This paper reports an analysis of the economy wide effects of changes both in the flow of labour from Turkey to EU and the flow of labour remittances to Turkey by migrant workers. Due to the past migration patterns and volumes of Turkish Gastarbeiter, the analysis focuses on the economic implications of this process for Germany as well as Turkey. The analyses are carried out by using a 22-sector, 6-factor and 15-region global computable general equilibrium model -Globe CGE- that is implemented in GAMS (see McDonald et al, 2005. For this study a method for augmenting the GTAP database using additional IMF data on remittance flows (McDonald and Sonmez, 2004) has been implemented as an extension to a global representation of the GTAP database (McDonald and Thierfielder, 2004). Since the data on inter regional transfers are not bilateral, an additional region, called “globe”, is defined as the recipient of all remittance expenditures and the source of all remittance incomes.