Investigation of GDP, youth unemployment and unemployment with panel data analysis methods for OECD countries

The phenomenon of unemployment, which is pointed out to be one of the main causes of today's socioeconomic problems, has gradually become a widespread problem not only among adults but also among young people. In order to cope with the macro consequences of the youth unemployment, which has similar factors in terms of its causes and consequences, the causes of the problem need to be identified. The main purpose of this study is to evaluate the relationship between unemployment and economic growth by taking into consideration the findings obtained as the result of econometric analyzes and the economic structures of the countries within the scope of Okun's Law (1962). In order to explain the relationship between youth unemployment and economic growth along with the relationship between unemployment and economic growth within the scope of Okun's Law, the Youth Unemployment Ratio was added into the basic form of the model. By adding this ratio into the original model, the effect of Unemployment and Youth Unemployment on GDP as well as how and to what extent these ratios were affected by economic growth were investigated. In the analysis phase of the study, the given relationship was examined through four models and a panel dataset containing 24 OECD countries in the period of 2000-2017. Firstly, the cointegration relationship was tested with panel cointegration tests without the structural breaks assumption, and then the long-term relationship was tested with the Westerlund (2009) panel cointegration test with the structural breaks assumption, and the difference of the structural breaks assumption on the findings was exhibited. The general validity of these relationships for the examined countries was studied on the panel basis and with cross-sectional regression estimates. To be able to explain the interaction between the variables in the examined models, the causal relationship was investigated. Although the results vary on a country-by-country basis, the coefficients obtained for the panel reveal that the sensitivity of youth unemployment to economic growth is higher than unemployment, whereas the effect of youth unemployment on economic growth is as high as unemployment.