Understanding the COVID-19 Impacts on Industrial Production and Employment: Macro-level Evidence from Türkiye

Year 2025, Issue: 88, 152 - 162, 25.07.2025

Muhammad Salah Uddin , Abidin Öncel , Mohammad Shoyeb , Mamunur Rashid

https://doi.org/10.26650/jspc.2023.85.1578647

Abstract

This study aims to quantify the impact of COVID-19 on industrial production and employment in Türkiye. The research applies three models: pooled OLS, random effect model, and two-step system GMM using quarterly data from the Turkish manufacturing industries from 2019Q1 to 2021Q1. The findings reveal that although COVID-19 negatively affects employment and output, the impact is not robust. This outcome is likely due to the Turkish government’s employment-friendly programme during COVID-19, which restricted the layoffs. On the other hand, exports, real wages, and the lagged value of employment significantly increased employment. In addition, inflation, real wages, and the lagged value of industrial production have a substantial positive contribution to the increasing output. However, currency depreciation has a significant negative effect on both employment and output. The study provides insights into the fact that the reduced-hour policy is more effective.

JEL Classification : E24 , O11 , O14 , O24

Keywords

COVID-19, Türkiye, Employment, Industrial production, GMM, Pandemic

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