OUTPUT-EMPLOYMENT RELATIONSHIP ACROSS SECTORS: A LONG- VERSUS SHORT-RUN PERSPECTIVE


Creative Commons License

ŞAHİN A., Tansel A., BERUMENT M. H.

BULLETIN OF ECONOMIC RESEARCH, vol.67, no.3, pp.265-288, 2015 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 67 Issue: 3
  • Publication Date: 2015
  • Doi Number: 10.1111/boer.12017
  • Journal Name: BULLETIN OF ECONOMIC RESEARCH
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.265-288
  • Keywords: employment, output, seasonal cointegration, C32, E24, E32, OKUNS LAW, UNITED-STATES, TIME-SERIES, UNEMPLOYMENT, COINTEGRATION, INDUSTRIES, DYNAMICS, GROWTH, RECESSIONS, SERVICES

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 does not reveal statistically significant relationships for either total employment or non-agriculture employment, or eight 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 labour market are discussed. As a result, maintaining high levels of output in the long-run creating demand is essential for employment generation.