Self-Employment and Unemployment in Turkey

The relationship between the rates of self-employment and unemployment has been extensively studied in the literature. The results of the existing studies are varied. The aim of this paper is to investigate the dynamic relationship between these variables in Turkey. The results indicate that there is a long-run relationship between the rates of self-employment and unemployment. Changes in self-employment rates have a negative effect on subsequent unemployment rates. There is evidence for the existence of causality running from self-employment rate to unemployment rate. The results reveal the existence of an entrepreneurial effect. However, it is not possible to assess the exact entrepreneurial effect due to the restraint in the coverage of selfemployment data. Involvement of unpaid workers in self-employment probably disguises the exact entrepreneurial effect