ANALYSIS OF UNEMPLOYMENT HYSTERESIS IN TURKEY: STRUCTURAL BREAK UNIT ROOT TEST

Year 2017, , 368 - 376, 30.12.2017

Aylin Idıkut Ozpence , Eren Ergen

https://doi.org/10.17261/Pressacademia.2017.747

Abstract

Purpose- There are two basic approaches in the literature on the
dynamic tendencies of unemployment. The first is the concept of the natural
rate of unemployment put forward by Friedman (1968) and Phelps (1968). The
second is dynamics path dependent concept of unemployment hysteresis, as
explained by Blanchard and Summers (1986a, 1986b). Shocks in the economy cause
permanent effects on unemployment according to in unemployment hysteresis
hypothesis, while unemployment occurs at a certain rate according to the natural
rate of unemployment approach. The aim of this paper is to determine whether
unemployment hysteresis exist in Turkey. 

Methodology- In this study, the existence of unemployment
hysteresis in Turkey is tested using the monthly data for period of 2005m012016m11.
Lee-Strazicich (LS) test which of taken account structural breaks unit root
tests is performed. In the analysis, both single break LS (2013) and double
breaks LS (2003) tests is used.

Findings- While the natural of rate unemployment is at a stationary
according to unit root tests, unemployment hysteresis is nonstationary. It
means that the unemployment rate has been disclosed with past values. The
results show that the unemployment hysteresis hypothesis is valid for Turkey
when the analysed period is considered.

Conclusion- Unemployment rates in Turkey are unresisting to
shocks. Unemployment rates are permanently affected by emerging shocks.
Therefore policy makers should take into account to this situation when
implementing employment policies. 

Keywords

Natural rate of unemployment, unemployment hysteresis, structural breaks, unit root tests, Turkey

References

• Akçay S. (2013). The Unemployment Hysteresis Analysis For Turkey. Yayımlanmamış Yüksek Lisans Tezi, ODTÜ, Ankara.
• Arı A., Zeren F. ve Özcan B. (2013). Doğu Asya ve Pasifik Ülkelerinde İşsizlik Histerisi: Panel Veri Yaklaşımı. Marmara Üniversitesi İİB Dergisi, 15(2), ss. 105-122.
• Ball L.M. & Mankiw N. G.(2002). The NAIRU in Theory and Practice. Journal of Economic Perspectives, 16(4), pp. 115-136.
• Ball L.M. (2009). Hysteresis in Unemployment: Old and New Evidence. National Bureau of Economic Research Working Paper: 14818, pp. 137.
• Barışık S. ve Çevik E. İ. (2008). Yapısal Kırılma Testleri ile Türkiye’de İşsizlik Histerisinin Analizi: 1923-2006 Dönemi. KMU İİBF Dergisi, 10(14), ss. 109-134.
• Bayat T., Kayhan S. ve Koçyiğit A. (2013). Türkiye’de İşsizliğin Asimetrik Davranışının Rejim Değişim Modeliyle İncelenmesi. Business and Economics Research Journal, 4(2), ss. 79-90.
• Baydur C. M. ve Süslü B. (2015). Türkiye’de NAIRU’yu Etkileyen Kısa ve Uzun Vadeli Etmenler. Business and Economics Research Journal, 6(1), ss. 43-62.
• Bayrakdar S. (2015). Türkiye İçin İşsizlik Histerisi ya da Doğal İşsizlik Oranı Hipotezinin Geçerliliğinin Sınanması. İktisat Politikası Araştırmaları Dergisi, 2(2), ss. 45-61.
• Berk E. ve Çağlar A. E. (2016). Türkiye’de İşsizlik Histerisi: Yapısal Kırılmalı Birim Kök Analizi. International Multidisciplinary Conference, Antalya , 21-22 April 2016 ,ss. 830-836.
• Blanchard O. J. & Summers L. H. (1986a). Hysteresis and the European Unemployment Problem. NBER Working Paper Series, 1, pp. 15-90.
• Blanchard O. J. & Summers L. H. (1986b). Hysteresis in Unemployment. NBER Working Paper, 31(1-2), pp. 1-12.
• Cross, R., Hutchinson, H. & Yeoward, S. (1990). The Natural Rate, Hysteresis, and the Duration Composition of Unemployment in the U.S. Quarterly Journal of Business and Economics, Vol. 29, N0. 2, pp. 89-116.
• Edizdoğan N., Çetinkaya O. , Gümüş E. (2013). Kamu Maliyesi, Ekin Basım Yayın Dağıtım, 5. Baskı, Bursa.
• Ewing J.A. (1881). The Effects of Stress on The Thermoelectric Quality of Metals. Part 1. Proceedings of the Royal Society of London 32, pp. 399–402.
• Friedman M. (1968). The Role of American Monetary Policy. American Economic Review, 58, pp. 1-17.
• Friedman M. (1977). Nobel Lecture: Inflation and Unemployment. Journal of Political Economy, 85(3), pp. 451-472. Gustavsson M. & Osterholm P. (2006). Hysteresis and Nonlinearities in Unemployment Rates. Applied Economics Letters, 13(9), pp. 545548.
• Güloğlu B. ve İspir S. (2011). Doğal İşsizlik Oranı mı? İşsizlik Histerisi mi? Türkiye İçin Sektörel Panel Birim Kök Sınaması Analizi. Ege Akademik Bakış, 11, 2, ss. 205-215.
• Hall, R.E. (1979). A Theory of the Natural Unemployment Rate and the Duration of Employment. Journal of Monetary Economics, Vol. 5, pp. 153-169.
• Hiç-Birol, Ö. (2006). Keynesgil Sistem’in Gelişmesi. İstanbul Üniversitesi İktisat Fakültesi Mecmuası, 56(1), ss. 131-162.
• Lee J. & Strazicich M. C. (2003). Minimum Lagrange Multiplier Unit Root Test With Two Structural Breaks.The Review of Economics and Statistics, 85(4), pp. 1082-1089
• Lee J. & Strazicich M. C. (2013). Minimum LM Unit Root Test With One Structural Break. Economic Bulletin, 33(4), pp. 2483-2492.
• Modigliani F. & Papademos L. (1975). Targets for Monetary Policy in the Coming Year. Brooking Papers on Economic Activity, 1, pp. 142165.
• Modigliani, F. (2003). The Keynesian Gospel According to Modigliani. The American Economist, 47(1), pp. 3-24.
• Phelps, E.S. (1967). Phillips Curves, Expectations of Inflation and Optimal Unemployment Over Time. Economica, 34(135), pp. 254-281.
• Phelps, E.S. (1968). Money-Wage Dynamics and Labor-Market Equilibrium. Journal of Political Economy, 76(4) 2, Issues in Monetary Research, pp. 678-711.
• Phelps E.S. (1972). Inflation Policy and Unemployment Theory: The Cost Benefit Approach To Monetary Planning, W.W. Norton, New York.
• Røed, K. (1996). Unemployment Hysteresis-Macro Evidence From 16 OECD Countries. Empirical Economics, 21(4), pp. 589-600.
• Romero-Avila D. & Usabiaga C. (2007). Unit Root Tests and Persistence of Unemployment: Spain vs. the United States. Applied Economics Letters, 14(6), pp. 457-461
• Samuelson P.A. (1965). Some Notions on Causality and Teleology in Economics. Reprinted in Merton R.C. (1972). The collected scientific papers of Paul A. Samuelson, Vol III, MIT Press, pp. 428-472.
• Strazicich M. C.,Tieslau M. & Lee J. (2001). Hysteresis in Unemployment? Evidence From Panel Unit Root Test With Strucrural Change. University of North Texas WorkingPaper, pp. 01-08.
• Timurlenk, M.S. ve Başar, S. (2012). Türkiye İçin Enflasyonu Hızlandırmayan İşsizlik Oranı (NAIRU) Tahmini. Dokuz Eylül Üniversitesi İ.İ.B.F. Dergisi, 27(1), ss. 71-83.
• Tobin, J. (1997). Supply Constrations om Employment and Output: NAIRU versus Natural Rate. Cowles Foundation Paper 1150, Yale University, New Haven.
• Ulusoy A. (2013). Maliye Politikası, Celepler Matbaacılık, 7. Baskı, Trabzon.
• Yalçınkaya Ö., Kaya V. (2017). Doğal İşsizlik Oranı Mı Yoksa; İşsizlik Histerisi Mi?: OECD Ülkeleri İçin Yeni Nesil Panel Birim Kök Testlerinden Kanıtlar (1980-2015). Selçuk Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, Sosyal Ekonomik Araştırmalar Dergisi, 17(33), ss. 1-18.
• Yılancı V. (2009). Yapısal Kırılmalar Altında Türkiye İçin İşsizlik Histerisinin Sınanması. Doğuş Üniversitesi Dergisi, 10, 2, ss. 324-335.
• Yıldırım S. (2011). Türkiye’de Histeri Hipotezinin Geçerliliğinin Çoklu Yapısal Kırılmalı CKP Birim Kök Testiyle Sınanması. Akdeniz İ.İ.B.F. Dergisi, 22, ss. 28-47.
• http://www.tuik.gov.tr/PreTablo.do?alt_id=1007, Erişim Tarihi: 07.03.2017.