Economic performance and unemployment: evidence from an emerging economy

Abstract

Purpose This article seeks to examine whether or not various macroeconomic policy shocks have different effects on overall unemployment and the unemployment by different levels of education in Turkey. These effects are assessed separately for male and female unemployment. Design/methodology/approach To examine the relationship, a quarterly VAR model with a recursive order is employed to estimate the effects of real GDP, price, exchange rate and interbank interest rate on unemployment for the period from 1988:01 to 2003:04. Findings Main findings indicate that monetary policy does not affect the total unemployment as well as the components of unemployment by educational level and by gender in Turkey. On the other hand, income policies, which include fiscal policies, and unemployment itself, might be the main factors that affect the behavior of total unemployment and its various components. Research limitations/implications These findings suggest that policy makers should concentrate on non‐monetary policies to hamper the unemployment in Turkey. Originality/value The present study is the first empirical examination of the relationship between various macroeconomic policy shocks and the unemployment both across gender and education levels in a single study.