Applied Econometrics and International Development Vol.7-1 (2007) THE RESPONSE OF EMPLOYMENT TO GDP GROWTH IN TURKEY: AN ECONOMETRIC ESTIMATION

This paper aims to investigate the mechanism of adjustment in the labor market with respect to changes in GDP for the period 1988-2004. For this purpose, the response of the demand for labor to changes in GDP is modeled as an error correction model. The results of the analysis indicate that the adjustments in the labor market lagged GDP growth. Confining the analysis to the manufacturing sector provides similar results. Further analyses of variance decomposition for GDP and employment show that labor market responds to GDP changes with a delay of more than 4 periods