DETERMINANTS OF EMPLOYMENT IN MANUFACTUTING SECTOR: TURKISH CASE

Abstract

The importance of unemployment and employment for developed and developing countries still exists and has been increasing. Economists accept that unemployment is not only an economic problem. In order to find what type of variables affect the industry sector employment in Turkey, GDP, productivity, wages, and current account deficit variables are examined by using Granger causality and the Toda-Yamamoto method. According to the Granger causality test’s result, there is a two-way relation that goes from employment to GDP, productivity, and current account deficit. While there is a one-way relation from employment to wages, wages do not affect employment. If we look at the results from the Toda-Yamamoto long-run causality analysis, GDP and productivity cause employment, but there is no long-run relationship between wages and employment