The relationship of the vertical specialization and employment

This thesis consists of two essays which are related to each other. The first essay is intended to be the calculation of vertical specialization ratio for Turkey and countries selected among the Turkey's most important trade partners and more detailed analysis for Turkey. In the second essay, it is aimed to determine the effect of vertical specialization rates calculated in the first essay on employment in these countries. According to the results obtained from the first essay, Turkey has an increasing trend in the rate of vertical specialization during 2000-2014. Furthermore, it is the country with the sharpest increase among its trade partners. Among the sectors, the manufacturing sector has the largest share in VS ratio compared to other sectors. When the industrial sector is examined in terms of sub-sectors, it is seen that medium-low technology intensive sectors are the main sub-sectors that increase vertical specialization. According to the results of the second essay, while vertical specialization has no effect on employment in 2000-2004 period, it has a statistically significant and negative effect in 2005-2009 and 2010-2014 periods. This result shows that this new process, in which the production is fragmented in the countries discussed, creates a structure that reduces employment.