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Output-Employment Relationship across Sectors: A Long- versus Short-Run Perspective

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  • Sahin, Afsin

    () (Gazi University)

  • Tansel, Aysit

    () (Middle East Technical University)

  • Berument, Hakan

    () (Bilkent University)

Abstract

This paper investigates the nature of the output-employment relationship by using the Turkish quarterly data for the period 1988-2008. Even if we fail to find a long-run relationship between aggregate output and total employment, there are long-run relationships for the aggregate output with non-agricultural employment and sectoral employment levels for seven of nine sectors that we consider. However, a further investigation for the output and employment relationship within a short-run perspective do not reveal statistically significant relationships for either total employment, or non-agriculture employment or the eight out of the nine sectors that we consider. Although there are various long-run relationships between output and employment, the short-run links between demand and employment are weak. The various implications of this for the economy and the labor market are discussed. As a result, maintaining high levels of output in the long-run creating the demand is essential for employment generation.

Suggested Citation

  • Sahin, Afsin & Tansel, Aysit & Berument, Hakan, 2013. "Output-Employment Relationship across Sectors: A Long- versus Short-Run Perspective," IZA Discussion Papers 7599, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7599
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    Keywords

    output; seasonal cointegration; employment;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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