The relationship between unemployment and economic growth in Turkey (1960-2015)

As in any country, the main objective of macroeconomic policies in Turkey is to promote economic growth which comes along with a reduction in unemployment. Although there is a theoretical consensus on the negative relationship between unemployment and economic growth, the argument that high growth rates does not decrease unemployment has been the subject of discussions recently. The main object of this research is to explore whether the theoretical negative relationship between unemployment and economic growth holds true in the case of Turkey. In accordance with this object, the aim of the study is to analyses the relationship between unemployment and economic growth and to evaluate the results in a theoretical framework. In this study, the relationship between unemployment and economic growth is analyzed using the data from Turkey for the 1960-2015 period. The results of the analysis show that there is a long-run co-integration between unemployment and economic growth. According to the results of the study, there is no short term relationship between unemployment and economic growth. However in the long-run, there is a one directional causal link from unemployment to economic growth. Keywords: Economic growth; time series analysis; unemployment