Diffusion effect of employment in Turkey: Sub-industries, the example of comparative manufacturing: 1989-2010

The main purposes of this study is to present Turkish employment structure on the basis of skilled labor force, examine the relation between the growth and employment in order confirm the concept of growth which doesn't create employment, and to test the main hypothesis builded by us drived from Kaldor-Verdoorn law, within the framework of three sector theory and manifacturing industry in particular. Within the scope of Kaldor-Verdoorn Law, the first of these theories claim that there is a positive relation between the GDP and the production in industry sector. Second hypothesis explains the strong bind between the increase in industrial production and increase in labor force productiveness. Third hypothesis put forward that the industries which creates increasing returns to the scale brings qualified employment, and increased productiveness in industry causes a spread of qualified employment to the other sectors. The last hypothesis asserts that Turkish economy has a growth rate which hasn?t created employment in the period of 1989-2010.In this study; Granger causality test, Engle & Granger cointegration analyses and panel data methods on industrial base have been used. Then the required econometric model predictions are comparatively evaluated using a productivity based index indicator which is calculated by us. The data base subjected to the Index is the ratio of each sector's share in gross domestic product divided by the share of employees in the sector concerned. Subsequently, on the level of Turkish manifacturing sector, (TİSAS) panel data analysis is used to test the spread of employment in manifacturing sub sectors.Results of this study show that Kaldor Verdoorn law is valid in Turkey. However, the employment creating/positive effect of the industry sector doesn't show the expected spill-over effect on the other sectors. Hence, Turkish economy has a growth period, which doesn't create employment. Both two methods' analytical findings validates each other. Besides,employment creating effect in the sub sectors of manifacturing industry, as it is in industry sector, not as strong as desired and spill over effect doesn?t exist. These findings prove the importance of the creation of new policies.Keywords: Kaldor ? Verdoorn Law, Three Sectors Theory, Sub ?Industries of Manufacturing Sector, Jobless Recovery, Productivity, Employment Policies