IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v13y2025i2p28-d1577646.html
   My bibliography  Save this article

The Relationship Between Firm Formation and Unemployment: Evidence from Türkiye

Author

Listed:
  • Muhammad Moiz

    (Department of Economics, Ibn Haldun University, Başakşehir 34480, Istanbul, Türkiye)

  • Şerife Genç Ileri

    (Department of Economics, Faculty of Management, Istanbul Technical University, Macka 34367, Istanbul, Türkiye)

Abstract

This paper aims to explore the relationship between firm formation and unemployment using regional and city-level Turkish data. We focus on the post-2008 financial crisis period and analyze the effects of unemployment and other control variables on firm formation at NUTS-II and NUTS-III regions of Türkiye. We estimate a fixed-effects panel data model and control for GDP per capita, urbanization, population density, patents, high school education, and higher education. Our results suggest that there is a significant positive effect of unemployment on new firm formation. The analysis concerning the converse relation, the impact of firm formation on unemployment, reveals no significant results at the NUTS-II level; however, a significant negative relationship is found at the city level with 4- and 5-year lags.

Suggested Citation

  • Muhammad Moiz & Şerife Genç Ileri, 2025. "The Relationship Between Firm Formation and Unemployment: Evidence from Türkiye," Economies, MDPI, vol. 13(2), pages 1-22, January.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:2:p:28-:d:1577646
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/13/2/28/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/13/2/28/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Joao Galindo da Fonseca, 2022. "Unemployment, Entrepreneurship and Firm Outcomes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 322-338, July.
    2. André Stel & Martin Carree & Roy Thurik, 2005. "The Effect of Entrepreneurial Activity on National Economic Growth," Small Business Economics, Springer, vol. 24(3), pages 311-321, February.
    3. Natalie Hegwood & David H. Papell, 2007. "Are Real GDP Levels Trend, Difference, or Regime‐Wise Trend Stationary? Evidence from Panel Data Tests Incorporating Structural Change," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 104-113, July.
    4. Zizi Goschin & Mihai Antonia & Horia Tigau, 2021. "Entrepreneurship Recovery in Romania after the Great Recession. A Dynamic Spatial Panel Approach," Sustainability, MDPI, vol. 13(19), pages 1-12, September.
    5. Tsangyao Chang & Wen-Chi Liu & Shu-Chen Kang & Kuei-Chiu Lee, 2008. "Is Per Capita Real GDP Stationary in Latin American Countries? Evidence from a Panel Stationary Test with Structural Breaks," Economics Bulletin, AccessEcon, vol. 3(31), pages 1-12.
    6. Adriaan Van Stel & David Storey, 2004. "The Link between Firm Births and Job Creation: Is there a Upas Tree Effect?," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 893-909.
    7. Ozturk, Ilhan & Kalyoncu, Huseyin, 2007. "Is Per Capita Real GDP Stationary in the OECD Countries? Evidence from a Panel Unit Root Test," MPRA Paper 9635, University Library of Munich, Germany.
    8. André Stel & Kashifa Suddle, 2008. "The impact of new firm formation on regional development in the Netherlands," Small Business Economics, Springer, vol. 30(1), pages 31-47, January.
    9. Bulent Guloglu & Mehmet Ivrendi, 2010. "Output fluctuations: transitory or permanent? the case of Latin America," Applied Economics Letters, Taylor & Francis Journals, vol. 17(4), pages 381-386.
    10. Natalie Hegwood & David H. Papell, 2007. "Are Real GDP Levels Trend, Difference, or Regime-Wise Trend Stationary? Evidence from Panel Data Tets Incorporating Structural Change," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 104-113, July.
    11. Evren Ceritoglu & H. Burcu Gurcihan Yunculer & Huzeyfe Torun & Semih Tumen, 2017. "The impact of Syrian refugees on natives’ labor market outcomes in Turkey: evidence from a quasi-experimental design," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-28, December.
    12. Karlsson, Sune & Lothgren, Mickael, 2000. "On the power and interpretation of panel unit root tests," Economics Letters, Elsevier, vol. 66(3), pages 249-255, March.
    13. Burhan Can Karahasan, 2015. "Dynamics Of Regional New Firm Formation In Turkey," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 27(1), pages 18-39, March.
    14. Tsangyao Chang & Hsu-Ling Chang & Hsiao-Ping Chu & Chi-Wei Su, 2006. "Is per capita real GDP stationary in African countries? Evidence from panel SURADF test," Applied Economics Letters, Taylor & Francis Journals, vol. 13(15), pages 1003-1008.
    15. Vasudeva N. R. Murthy & Emmanuel Anoruo, 2009. "Are Per Capita Real GDP Series in African Countries Non-stationary or Non-linear? What does Empirical Evidence Reveal?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2492-2504.
    16. Mabel Pisá-Bó & José Fernando López-Muñoz & Josefina Novejarque-Civera, 2021. "The ever-changing socioeconomic conditions for entrepreneurship," International Entrepreneurship and Management Journal, Springer, vol. 17(3), pages 1335-1355, September.
    17. Natalie Hegwood & David H. Papell, 2007. "Are Real GDP Levels Trend, Difference, or Regime-Wise Trend Stationary? Evidence from Panel Data Tets Incorporating Structural Change," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 104-113, July.
    18. repec:ebl:ecbull:v:3:y:2008:i:31:p:1-12 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thurik, A. Roy & Carree, Martin A. & van Stel, André & Audretsch, David B., 2008. "Does self-employment reduce unemployment?," Journal of Business Venturing, Elsevier, vol. 23(6), pages 673-686, November.
    2. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    3. Thomas Neumann, 2021. "The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review," Management Review Quarterly, Springer, vol. 71(3), pages 553-584, July.
    4. Marcus Dejardin & André van Stel, 2025. "David Storey’s Contribution to Enterprise Policy: The Challenge of Stimulating the “Right” Type of Entrepreneurship," Post-Print halshs-05000926, HAL.
    5. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    6. Marcus Dejardin, 2011. "Linking net entry to regional economic growth," Small Business Economics, Springer, vol. 36(4), pages 443-460, May.
    7. M.A. Carree & A.R. Thurik, 2008. "The Lag Structure of the Impact of Business Ownership on Economic Performance in OECD Countries," Small Business Economics, Springer, vol. 30(1), pages 101-110, January.
    8. Fritsch, Michael, 2013. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(3), pages 249-364, February.
    9. Fritsch, Michael, 2008. "Die Arbeitsplatzeffekte von Gründungen : ein Überblick über den Stand der Forschung (The employment effects of new businesses : a survey of the current state of research)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(1), pages 55-69.
    10. Doruk Cengiz & Hasan Tekgüç, 2022. "Is It Merely a Labor Supply Shock? Impacts of Syrian Migrants on Local Economies in Turkey," ILR Review, Cornell University, ILR School, vol. 75(3), pages 741-768, May.
    11. Burhan Can Karahasan, 2023. "Spatial distribution of new firms and firm‐level innovation: Evidence from Turkey," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(9), pages 2156-2181, December.
    12. Michael Fritsch, 2011. "The effect of new business formation on regional development - Empirical evidence, interpretation, and avenues for further research," Jena Economics Research Papers 2011-006, Friedrich-Schiller-University Jena.
    13. Ho, Sin Yu & Beri, Parfait Bihkongnyuy, 2024. "The impact of SME sector on economic growth in Africa," MPRA Paper 122552, University Library of Munich, Germany.
    14. Michael Fritsch, 2008. "How does new business formation affect regional development? Introduction to the special issue," Small Business Economics, Springer, vol. 30(1), pages 1-14, January.
    15. Chang, Tsangyao & Chu, Hsiao-Ping & Ranjbar, Omid, 2014. "Are GDP fluctuations transitory or permanent in African countries? Sequential Panel Selection Method," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 380-399.
    16. Vasudeva N. R. Murthy & Emmanuel Anoruo, 2009. "Are Per Capita Real GDP Series in African Countries Non-stationary or Non-linear? What does Empirical Evidence Reveal?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2492-2504.
    17. Bakirtas, Tahsin & Akpolat, Ahmet Gokce, 2018. "The relationship between energy consumption, urbanization, and economic growth in new emerging-market countries," Energy, Elsevier, vol. 147(C), pages 110-121.
    18. Francisco Liñán & José Fernandez-Serrano, 2014. "National culture, entrepreneurship and economic development: different patterns across the European Union," Small Business Economics, Springer, vol. 42(4), pages 685-701, April.
    19. Michael Fritsch & Pamela Mueller, 2008. "The effect of new business formation on regional development over time: the case of Germany," Small Business Economics, Springer, vol. 30(1), pages 15-29, January.
    20. Folorunsho M. Ajide & James T. Dada, 2023. "Poverty, entrepreneurship, and economic growth in Africa," Poverty & Public Policy, John Wiley & Sons, vol. 15(2), pages 199-226, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:13:y:2025:i:2:p:28-:d:1577646. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.