The Relationship Between Unemployment Rate and Economic Growth: The Case of Turkey

Authors : Mehmet MUCUK, Ayşen EDİRNELİGİL, Mustafa GERÇEKER

Pages : 1-8

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Publication Date : 2017-01-01

Article Type : Research Paper

Abstract :This paper investigates the relationship between unemployment rate and economic growth rate over the period 2002-2014 for Turkey. In this context, Johansen cointegration test and vector error correction model is applied to determine this relationship. Empirical findings show that the variables are not cointegrated so; there is no causal link between the two variables. This result does not support the Okun Law. However, in the short run growth shock have a negative impact on unemployment rate. On the other hand, shocks in unemployment have positive impact on the growth. The findings of this study have important policy implications.
Keywords : Unemployment, Economic Growth, Turkish Economy