The relationship between unemployment and growth: The case of Turkey

Nowadays, unemployment is one of the most important problems faced by many developed and underdeveloped countries. Similarly, economic growth is also an important factor for macroeconomic policy of each country. For this reason, the unemployment rate, which is expressed as the difference between growth rate and labor level and employment level, expressed as the increase of Real Gross Domestic Product, is seen as two important variables for the economy. Turkey in this study in order to reveal the relationship of economic growth and unemployment, primarily for economic growth, employment and unemployment was discussed in conceptual terms; Following the course of development are given every three indicators show the G-20 countries and in Turkey. Then, the relationship between growth and unemployment has been evaluated both theoretically and empirically. The relationship between growth and unemployment was analyzed by using time series based econometric methods by using quarterly data for 2005:Q1-2017: Q4 period. In the first stage of the study, it was concluded that the series were stationary at the level after the series were tested with stationary unit root tests. In the second stage, it was found that there was a cointegration relationship between economic growth and unemployment through border test. In the third phase, according to the ARDL results, the growth rate affects the unemployment rate negatively in the long term. The result is consistent with the "Okun Law". Finally, Toda-Yomamato causality analysis was used to determine the causality relationship between economic growth and unemployment. According to the obtained results, between economic growth and unemployment in Turkey for example it is determined to be a bi-directional causality. Key Words: Economic growth, Unemployment, Employment, ARDL, Toda-Yomamato.