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Modelling nonlinear behavior of labor force participation rate by STAR: An application for Turkey

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  • Sibel Cengiz

    ()
    (Department of Economics, Mugla Sitki Kocman University, Mugla, Turkey)

  • Afsin Sahin

    ()
    (Department of Banking, Gazi University, Ankara, Turkey)

Abstract

The aim of this paper is to contribute to the understanding of the behavior of participation rates in terms of gender differences. We employed smooth autoregressive transition models for the quarterly Turkish labor force participation rates (LFPR) data between 2000: Q1 – 2011: Q4 to present an asymmetric participation behavior. The smoothness parameter indicates a gradual transition from low to high regimes. It is higher for female workers compared to the male workers. Participation rates diminish during a recession but they increase smoothly during the periods of expansion. The estimation results of Enders et al. (1998) also verified the asymmetry and nonlinearity in participation rates. During periods of economic expansion, they are higher than the threshold but the low regime indicator function takes the value zero. The results of the paper have economic implications for policy makers. Due to the discouraged worker and added worker effects, LFPR should be observed with the unemployment rates while evaluating the tightness of the labor market.

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Bibliographic Info

Article provided by Technological Educational Institute (TEI) of Kavala, Greece in its journal International Journal of Economic Sciences and Applied Research (IJESAR).

Volume (Year): 7 (2014)
Issue (Month): 1 (April)
Pages: 113-127

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Handle: RePEc:tei:journl:v:7:y:2014:i:1:p:113-127

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Keywords: Labor Force Participation Rate; Asymmetry; Nonlinear Behavior; STAR Model;

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  1. Aysit Tansel & Zeynel Abidin Ozdemir & Mehmet Balcilar, 2011. "International Labour Force Participation Rates by Gender: Unit Root or Structural Breaks?," Koç University-TUSIAD Economic Research Forum Working Papers 1130, Koc University-TUSIAD Economic Research Forum.
  2. Magnus Gustavsson & P�R �Sterholm, 2007. "Does Unemployment Hysteresis Equal Employment Hysteresis?," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 159-173, 06.
  3. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March.
  4. Makoto Kakinaka & Hiroaki Miyamoto, 2011. "Unemployment and Labor Force Participation in Japan," Working Papers EMS_2011_15, Research Institute, International University of Japan.
  5. Granger, Clive W. J. & Terasvirta, Timo, 1993. "Modelling Non-Linear Economic Relationships," OUP Catalogue, Oxford University Press, number 9780198773207, September.
  6. Mehmet Balcilar & Rangan Gupta & Zahra Shah, 2010. "An In-Sample and Out-of-Sample Empirical Investigation of the Nonlinearity in House Prices of South Africa," Working Papers 201008, University of Pretoria, Department of Economics.
  7. Gustavsson, Magnus & Osterholm, Par, 2006. "The informational value of unemployment statistics: A note on the time series properties of participation rates," Economics Letters, Elsevier, vol. 92(3), pages 428-433, September.
  8. Benati, Luca, 2001. "Some empirical evidence on the 'discouraged worker' effect," Economics Letters, Elsevier, vol. 70(3), pages 387-395, March.
  9. Kerry Papps, 2010. "The Effects of Social Security Taxes and Minimum Wages on Employment: Evidence from Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1017, Koc University-TUSIAD Economic Research Forum.
  10. Gustavsson, Magnus & Österholm, Pär, 2010. "Labor-Force Participation Rates and the Informational Value of Unemployment Rates: Evidence from Disaggregated US Data," Working Paper Series 2010:14, Uppsala University, Department of Economics.
  11. Hartley, Michael J & Revankar, Nagesh S, 1974. "Labor Supply Under Uncertainty and the Rate of Unemployment," American Economic Review, American Economic Association, vol. 64(1), pages 170-75, March.
  12. Enders, Walter & Granger, C. W. J., 1998. "Unit Root Tests and Asymmetric Adjustment with an Example Using the Term Structure of Interest Rates," Staff General Research Papers 1388, Iowa State University, Department of Economics.
  13. Paramsothy Silvapulle & Imad Moosa & Mervyn Silvapulle, 2004. "Asymmetry in Okun's law," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 353-374, May.
  14. Walter Enders & Yu Liu & Ruxandra Prodan, 2009. "Forecasting Series Containing Offsetting Breaks: Old School And New School Methods Of Forecasting Transnational Terrorism," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(6), pages 441-463.
  15. Julia Darby & Robert A Hart & Michaela Vecchi, 1998. "Labour Force Participation and the Business Cycle: A Comparative Analysis of Europe, Japan and the United States," Working Papers 9802, Business School - Economics, University of Glasgow.
  16. Betcherman, Gordon & Daysal, N. Meltem & Pagés, Carmen, 2008. "Do Employment Subsidies Work? Evidence from Regionally Targeted Subsidies in Turkey," IZA Discussion Papers 3508, Institute for the Study of Labor (IZA).
  17. Jakob Madsen & Vinod Mishra & Russell Smyth, 2008. "Are Labour Force Participation Rates Non-Stationary? Evidence From 130 Years For G7 Countries ," Australian Economic Papers, Wiley Blackwell, vol. 47(2), pages 166-189, 06.
  18. Emerson, Jamie, 2011. "Unemployment and labor force participation in the United States," Economics Letters, Elsevier, vol. 111(3), pages 203-206, June.
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