Comparative analysis of Beveridge Curve during global financial crisis and COVID-19 crisis in Turkey

Following the impact of Global Financial Crisis (GFC), there has been increasing interest in the study of the Beveridge curve. This thesis analyses the unemployment and vacancy rate dynamics for the Turkish labour market during the period of global financial crisis and Covid-19 in the mirror of Beveridge curve. The visual inspection of the Beveridge curve reveal that the labour market is inefficient due to a shift in Beveridge curve away from the origin. It is evident that both unemployment rate and vacancy rate increase over the period with a counter clockwise (clockwise) movement of the curve for Global Financial Crisis (Covid-19). The visual inspection shaped the understanding of the unemployment-vacancy behaviour. The Beveridge curve shift for the labour market is attributed to cyclical and structural factors within the economy. Our empirical results show youth unemployment to be the significant factor determining unemployment dynamics both in the short run and long run. GDP growth and construction sector employment are also shown to exert great influence on unemployment dynamics in Turkey during the sample period. In addition, we found that GFC and Covid-19 have no significant effect on the Beveridge curve. Vacancy rate expected to have a negative relationship with unemployment rate is shown to have a positive insignificant effect. This is in contradiction to the Beveridge curve proposition. This implies that vacancy rate in Turkey falls short of the unemployment number in the labour market. There are no consistent job creations to match the number of people seeking for jobs in the economy. Based on this, the Turkish labour market is characterised by inefficiencies.