Turkish labor market: Complex dynamics and challenges

Abstract

We aim to scrutinize the main dynamics of Turkish labor market that exhibits sizable changes in terms of labor force and employment across subperiods in the aftermath of 2001 crisis which imposed profound institutional reforms. While the overall and non-farm unemployment rates decreased slightly until the Great Recession, they declined back to their 2005 levels only in 2014, at which point we witnessed another bout of increase of unemployment; the non-farm unemployment reached 13% in 2016, and it evolves around 14% currently. The dynamics behind this rise are driven by sustained economic growth and the soaring female labor force participation rates. Unfortunately, both the gender gap in unemployment rates and youth unemployment rates ascended during this period. Furthermore, given the current macroeconomic setting in Turkey, a comparable growth performance is unlikely to last into the years ahead.