The fundamental aim of this paper is to explore the empirical relationship between employment and economic growth in Turkey over the period 1995Q1-2007Q4 by using modern time series techniques. The employment growth performance is a concern for Turkey as its employment rate is well below any European Union (EU) member country. Some authors have argued that the rates of employment growth in Turkey have remained low over the same period despite relatively strong economic growth. The results of cointegration tests indicate the existence of a long-run relationship between the real GDP and employment. An estimate of employment elasticity of economic growth is obtained by applying the method of least squares over the period 1995Q1-2007Q4. The estimation of employment elasticity has yielded a value of 0.20, indicating a positive functional relationship between employment and output. The results of Granger causality tests reveal that there exists a bi-causality relationship between real GDP and employment in the case of Turkey.
Employment, Economic Growth, Employment Policy, Employment Intensity of Growth, Cointegration. JEL Classification: J2, O4.