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Keywords:

  • employment;
  • output;
  • seasonal cointegration;
  • C32;
  • E24;
  • E32

ABSTRACT

This paper investigates the nature of the output–employment relationship by using the Turkish quarterly data for the period 1988–2008. Even if we fail to find a long-run relationship between aggregate output and total employment, there are long-run relationships for the aggregate output with non-agricultural employment and sectoral employment levels for seven of nine sectors that we consider. However, a further investigation for the output and employment relationship within a short-run perspective does not reveal statistically significant relationships for either total employment or non-agriculture employment, or eight of the nine sectors that we consider. Although there are various long-run relationships between output and employment, the short-run links between demand and employment are weak. The various implications of this for the economy and the labour market are discussed. As a result, maintaining high levels of output in the long-run creating demand is essential for employment generation.