The relationship between unemployment and economic growth in Turkey

Unemployment and economic growth are extremely important macroeconomic variables in terms of determining the success of the country's economy. Therefore, importance of efforts to determine the relationship between unemployment and economic growth has increased, especially for developing countries. In this study, the relationship between unemployment and economic growth was investigated for the 2000-2018 period of Turkish economy. The main target of macroeconomic policies of each country as well as in the Turkish economy is to ensure economic growth will bring about a decrease in unemployment occurred. In the empirical analysis of the relationship between unemployment and economic growth the quarterly data of Turkey's economy regarding to the period 2000:2-2018:3 was used. The existence of the relationship between the variables was tested by the bound test. The short and long-term relationships between the variables were analyzed through the Autoregressive Distributed Lag Model (ARDL) model, and the direction of the causality relationship was determined by applying Toda-Yamamoto causality analysis. According to the findings obtained from empirical analysis of unemployment and economic growth in Turkey it has been determined that there is a cointegration relationship between them. According to the results obtained from the ARDL Model, there was no significant relationship between unemployment and economic growth in the long term, while it was concluded that unemployment had significant and negative effects on economic growth in the short term. Causality analysis results reveal that there is bidirectional causal relationship between unemployment and economic growth variables. Key Words: Unemployment, Economic Growth, ARDL, Bound Test, TodaYamamoto Causality Analysis