The effects of active labor market policies on unemployment and employment in Turkey

The primary objective of this study is to examine the impacts of active labor market programs, implemented within the scope of active labor market policies in Turkey, on unemployment and the labor force. While investigating the effects of these programs on unemployment and labor force participation, the study also analyzes their gender- based impacts. In addition, public expenditures, real exchange rate, industrial production index and consumer price index, which are thought to have effects on unemployment and labor force by taking into account the relevant literature, were also included in the analysis. The stationarity of the variables is tested using both traditional unit root tests namely, the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests and the Lee- Strazicich (2003) unit root test, which accounts for structural breaks. Subsequently, causality analyses are conducted, applying the Hacker and Hatemi-J (2006) bootstrap causality test, the Hatemi-J (2012) asymmetric causality test, and the Balcilar et al. (2010) bootstrap rolling window causality test. The application of a gender-disaggregated analysis, along with the implementation of the Hatemi-J (2012) test which explores causality by decomposing shocks to the variables and the Balcilar et al. (2010) test which enables a time-varying investigation of causality distinguishes this study from previous literature. Based on the empirical findings, several policy recommendations are proposed to enhance the effectiveness of active labor market programs.