Oil price volatility and its effect on unemployment indicators volatility: The case of Turkey

Developing and also petroleum importing countries like Turkey and also importing petroleum are directly or indirectly dependent on oil, which has a large share in the energy sector. Energy sector means industry, production, capital. The importance of the energy sector for the development and survival of a country is very great. Unemployment, which is one of the striking factors in determining the development and development levels of the countries, is directly affected even though its connection to this sector is seen indirectly. In our country, the young population is increasing the need for jobs, increasing oil prices are triggering unemployment as a chain. This situation affects the balance of unemployment in a negative way in the country. Especially in oil import countries, the increase in oil prices results in an increase in the cost of inflation and input and output; and has a negative effect on public expenditures, tax revenues and budget. The fact that oil is a non-renewable source causes price shocks in oil prices from time to time. As a result of this, the national economy, the world economy's Speed has fallen, unemployment has increased, inflation has increased. The employer will want to employ less workers with the tax burden, and workers will have to do more for less wages. In this study, the monthly data set was created using TURKSTAT for unemployment rate between January 1, 2006 and June 1, 2016 and Fred for oil price. In the series, the changes were observed and the unemployment rate volatility modeled and the effect of oil price volatility on unemployment rate volatility was investigated. In order to model volatility, Autoregressive conditional variation (ARCH) models were used and the appropriate model was determined. Normal distribution was used. AIC, SIC and log-likelihood model selection criteria were used to determine the appropriate model. According to the model selection criteria, the most appropriate model is the GARCH(1,1) normal distribution. As a result of the modelling of the unemployment rate among the indicators of oil price volatility, it has been determined that it has a positive effect on the unemployment rate