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Testing for unemployment hysteresis in Turkey: evidence from nonlinear unit root tests

Author

Listed:
  • Burak Güriş

    (Istanbul University)

  • Burcu Yavuz Tiftikçigil

    (Gedik University)

  • Muhammed Tıraşoğlu

    (Istanbul University)

Abstract

Unemployment rate is one of the most critical indicators of labor market and is generally an important measurement tool to identify the status of the economies of countries. The impact of transitory shocks on unemployment is analyzed via the Natural Unemployment Rate—NAIRU and the Hysteresis Hypothesis. The term hysteresis describes a situation in which transitory shocks have persistent effects. According to hysteresis hypothesis, the cyclical supply shocks lead to structural changes and have a persistent effect on unemployment in the long run. Therefore this causes the natural unemployment rate to go up. Unemployment is an important economic problem for Turkish economy. Finding a solution to the unemployment problem that causes significant economic and social problems is one of the most important fields of work for policymakers. Therefore, it is important to identify the impact of transitory shocks on unemployment in order to develop effective employment policies to solve the unemployment problem. Different from the other studies in literature that made use of linear techniques, the presence of the hysteresis hypothesis for Turkey is analyzed using the nonlinear unit root tests Kapetanios et al. J Econom 112 359–379, (2003) and Kruse Stat Pap 52 71–85, (2011) for the period 1970–2014. The findings indicate that the hysteresis hypothesis is not valid for Turkey.

Suggested Citation

  • Burak Güriş & Burcu Yavuz Tiftikçigil & Muhammed Tıraşoğlu, 2017. "Testing for unemployment hysteresis in Turkey: evidence from nonlinear unit root tests," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(1), pages 35-46, January.
    • Handle: RePEc:spr:qualqt:v:51:y:2017:i:1:d:10.1007_s11135-015-0292-z
    DOI: 10.1007/s11135-015-0292-z
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    2. Muhammed TIRAŞOĞLU, 2019. "Unemployment hysteresis analysis for OECD countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(621), W), pages 53-62, Winter.
    3. Vuyokazi Pikoko & Andrew Phiri, 2019. "Is There Hysteresis in South African Unemployment? Evidence from the Post-Recessionary Period," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 15(3), pages 365-387, JUNE.
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