Abstract:

The study aims to examine the invalidity of the natural unemployment rate hypothesis and the validity of the hysteresis hypothesis in unemployment in Turkey for the period 1988-2018. For this purpose, annual frequency data were used Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) tests and Lee-Strazicich Lagrange Multiplier and Lumsdaine-Papell unit root test methods with multiple structural break were applied in the study. Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) classical unit root test results show that the unemployment rate series is not stationary according to level value. In addition, it is concluded that this series nonstationary applied to the unemployment rate series Lee-Strazicich Lagrange Multiplier and Lumsdaine-Papell unit root tests, which allow multiple structural breaks. Obtained the findings show that the hysteresis hypothesis is valid in unemployment for the period 1988-2018 in Turkey, it is concluded that shocks have long-run effects on unemployment rate in Turkey. Due to the long-run existence of the effects of these shocks, long-run employment-enhancing policies should be implemented to solve the unemployment problem in Turkey.

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