Is Jobless Growth Valid in Turkiye? A Sectoral Analysis of the Relationship between Unemployment and Economic Growth

TL;DR

This study examines sectoral growth's impact on unemployment in Turkiye from 2000 to 2022, finding that growth in agriculture, industry, construction, and services sectors reduces unemployment, thus challenging the idea of jobless growth.

Contribution

It provides a sectoral analysis of the relationship between economic growth and unemployment in Turkiye, using ARDL, FMOLS, and CCR methods to test the validity of jobless growth.

Findings

Growth in all sectors reduces unemployment in the short-run.

Long-run impacts of sectoral growth on unemployment are stronger than short-run effects.

Jobless growth is not supported; economic growth helps decrease unemployment.

Abstract

This study analyzes the validity of jobless growth in Turkiye on sectoral basis. It analyzes the impacts of agriculture, industry, construction and services sectors on unemployment using annual data for the period 2000-2022. ARDL method is applied within the scope of the analysis. The findings are tested with FMOLS and CCR methods. The results show that growth in all sectors reduces the unemployment. A one-unit increase in the share of agriculture sector in GDP decreases the unemployment rate by 0.471 points, 0.680 points in the industrial sector, 0.899 points in the construction sector and 1.383 points in the services sector in the short-run. The long-run coefficients reveal that the impacts of sectoral growth on unemployment are stronger in the long-run than in the short-run. A one unit increase in the share of the agricultural sector in GDP decreases the unemployment rate by 2.380 points, 4.057 points in the industrial sector, 1.761 points in the construction sector and 3.664 points in the services sector in the long-run. These findings show that jobless growth is not valid in Turkiye in general. On the contrary, economic growth plays an important role in reducing unemployment.