Abstract:

The study aims to test the ‘Unemployment Growth Hypothesis’ using quarterly data between 2010-2017 for the selected 5 highly developed OECD countries (Canada, Germany, Japan, Sweden and the United States) and 5 medium-developed OECD countries (Chile, Hungary, Mexico, Poland and Turkey). The hypothesis claims that when economic growth increases, it will not reduce unemployment. The study first established the variables in the model (Levin, Lin and Chu; Im, Pesaran and Shin; Breitung). In the second phase, the analysis of the co-integration (Pedroni and Kao) of long-term relationships between the variables was examined. In the final phase, the long-term multiplies between the variables were predicted by the Full Corrected Small Square Method (FMOLS) and the Dynamic Small Square Method (DOLS). The result of the application was achieved as follows: a) The unit root tests applied to variables found that the variables were not stable in level values but stable at the 1% level of importance when the first differences were taken. (b) Pedroni Panel Integration and Kao Panel Integration test results indicate that there is a long-term relationship between the variables at a 5% level of importance. c) Under the FMOLS and DOLS methods, the "Unemployment Growth Hypothesis" is not applicable when assessed on the panel basis. When assessed on the basis of countries; it does not apply to the countries of Turkey, Hungary, Poland, Mexico, Canada, Germany, Japan and Sweden, and in the United States.

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