Inter-Sectoral Spillover Effects in Turkiye: A Global VAR Approach (Türkiye’de Sektörler Arası Yayılma Etkileri: Global VAR Yaklaşımı)

In this study, we empirically examine inter-sectoral spillover effects on the labor market in Turkiye over the period 1990– 2021. To this end, we analyse the responses of sectoral employment to the sector-specific real output and productivity shocks. The econometric approach involves an application of global vector autoregression methodology, which explicitly considers the inter-dependencies among the four main sectors of the Turkish economy, namely agriculture, industry, construction and services. We also investigate the impact of trade liberalization policy since 1980s in the Turkish economy on employment, real growth and productivity for each sector. Generalized impulse response function results indicate there are strong spillovers across sectors. In addition, our findings point out that the Turkish economy generally benefits from the outward-oriented growth strategy in terms of growth and productivity, but the net effect of this strategy on employment is uncertain for the aggregate economy.