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The Effect of Old Labor Force on Unemployment After Increasing the Pension Age in Turkey: An Econometric Analysis

Author

Listed:
  • Sevilay SARICA

Abstract

The aim of this study was to investigate the long-term relationship between the change in the labor force participation rates of the 15-24, 25-54, and 55-64 age groups and the unemployment after the retirement age was increased with the change made in 2008, by considering the annual data for the period of 1988-2021 in Turkey. ARDL Bounds Test and Vector Error Correction Model (VECM) were used to reveal this relationship. When the period covered in the study is examined, it was seen that there is a complementary relationship between the employment rates of the 15-24 and 25-54 age groups and the employment rate of the 55-64 age group both for the 1988-2008 period covering the early retirement period and for the 2008-2021 period after the retirement age was increased. As a result of the empirical findings obtained, it was determined that there is a cointegration relationship between the unemployment rate, GDP growth rate, and labor force participation rates of the 15-24, 25-54, and 55-64 age groups. As a result of the analysis, it was found that the labor force participation rates for the 15-24 and 55-64 age groups negatively affected the unemployment rate, while the labor force participation rate for the 25-54 age group positively influenced the unemployment rate. On the other hand, a negative but statistically insignificant relationship was obtained between the annual GDP growth rate and the unemployment rate.

Suggested Citation

  • Sevilay SARICA, 2023. "The Effect of Old Labor Force on Unemployment After Increasing the Pension Age in Turkey: An Econometric Analysis," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:230327
    DOI: 10.25295/fsecon.1321363
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    Keywords

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    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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