Economic Repercussions of Opening the Border to Labour Movements between North and South Cyprus

Policy changes in North Cyprus represent the first phase of integration of the labour markets of North and South Cyprus. Employment of construction workers from the North by South Cyprus has reduced the supply of workers in North Cyprus, while increasing individual incomes. To study the effects on economic well-being and wealth allocation in North Cyprus, a computable general equilibrium (CGE) model of the economy is employed. Moves to maintain labour market stability by issuing additional permits to workers entering North Cyprus from Turkey are also studied. This policy has significantly benefited all stakeholders in North Cyprus.