The Relationship between Industrial Growth and Labor Force Markets in Turkey

Abstract

The purpose of the study is to show the relationship between industrial growth and labor participation, unemployment and employment ratios in Turkey in the period 2005-2014. To this end, econometric time series techniques are utilized. The Granger-causality is used for testing the relationship. The data used in the study includes monthly observations from the year 2005 to 2014. The justification of this study is to make observations on the effects of economic policy the Turkish government has been implemented since early 2000s. As a tradeoff, choosing inflation targeting instead of unemployment, Turkey faces unemployment problems especially among the youth that is an important opportunity cost. It is noted that this tradeoff is negatively affecting the growth of the country. This study attempts to show the negative effects and further proposes a new economic policy. The other findings also include determination of the direction of the relationship between industrial growth and basic labor force market variables for Turkey.