The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis

Year 2024, Volume: 11 Issue: 1, 76 - 85, 16.02.2024

Mustafa Şit

https://doi.org/10.26650/JEPR1232910

Abstract

This study aims to estimate the minimum rate of economic growth required to reduce unemployment in the large emerging markets economies of the Fragile Five (i.e., Brazil, India, Russia, South Africa, and Türkiye). As proposed by Hansen (1999), the study conducts a panel threshold analysis based on Okun’s law to determine threshold effects. This paper presents new evidence regarding Okun’s law over the past three decades for five large emerging markets. The findings suggest the relationship between the cyclical components of unemployment and GDP growth to be characterized by non-linearities. In particular, unemployment will fall if economic growth exceeds an average threshold of 5.5%. This result proves the validity of Okun’s Law regarding the threshold for the country group under investigation. This study has also proven that economic growth must exceed a certain level in order to reduce the unemployment rate in these economies. Policymakers in the Fragile Five should consider a minumum of 5.50% as an economic growth target to provide employment. When considering the unstable economic performance of the Fragile Five’s economies, structural reforms should be made to ensure adequate economic growth and increase employment. To address the problem of poor growth, this study can propose economic measures such as reducing employment taxes, producing investment and employment-based policies, and increasing the effectiveness of private employment offices.

JEL Classification : C23 , E24 , O11

Keywords

Okun’s law, Nonlinearities and asymmetries, Panel threshold model, the Fragile five, Economic growth

Seçilmiş Gelişmekte Olan Büyük Ülkelerde İşsizlik ve Ekonomik Büyüme Arasındaki İlişki: Eşik Regresyon Analizi Kullanılarak Yeniden Bir İnceleme

Abstract

Bu çalışma, Kırılgan Beşlinin gelişmekte olan büyük ekonomilerinde (Brezilya, Hindistan, Rusya, Güney Afrika ve Türkiye) işsizliği azaltmak için gereken minimum ekonomik büyüme oranını tahmin etmeyi amaçlamaktadır. Çalışmada Hansen (1999) tarafından önerildiği gibi eşik etkilerini belirlemek için Okun kanununu temel alan bir panel eşik analizi yapılmaktadır. Bu makale, gelişmekte olan beş büyük pazar için son otuz yılda Okun yasasına ilişkin yeni kanıtlar sunmaktadır. Bulgular, işsizliğin döngüsel bileşenleri ile GSYİH büyümesi arasındaki ilişkinin doğrusal olmama durumuyla tanımlanabileceğini öne sürüyor. Özellikle ekonomik büyüme ortalama %5,5 eşiğini aşarsa işsizlik azalacaktır. Bu sonuç, incelenen ülke grubu için eşik değere ilişkin Okun Yasasının geçerliliğini kanıtlamaktadır. Kırılgan Beşli’deki politika yapıcılar, istihdam sağlamak için en az %5,50’yi ekonomik büyüme hedefi olarak görmelidir. Kırılgan Beşli ekonomilerinin istikrarsız ekonomik performansı göz önüne alındığında, yeterli ekonomik büyümeyi sağlamak ve istihdamı artırmak için yapısal reformlar yapılmalıdır. Zayıf büyüme sorununu ele almak için bu çalışma, istihdam vergilerinin düşürülmesi, yatırım ve istihdama dayalı politikalar üretilmesi ve özel istihdam bürolarının etkinliğinin artırılması gibi ekonomik önlemler önerebilir.

Jel Sınıflaması: C23, E24, O11

Keywords

Okun yasası, Nonlineer ve asimetriler, Panel eşik modeli, Kırılgan beşli, Ekonomik büyüme

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