Currently, there are ongoing debates on whether unemployment is caused by insufficient aggregate demand or by the inefficient functioning of the mechanisms between labor supply and demand. At this point, understanding the type of unemployment is important for implementing policies. Beveridge Curve is an important tool for understanding the types of unemployment. The Beveridge curve reveals a negative relationship between open jobs and unemployment rates in the labor market. While upward and downward movements on the Beveridge Curve provide information about cyclical expansion and contraction, the curve’s convergence and divergence from the origin provides information about structural
and/or temporary unemployment. By analyzing the movements in the Beveridge Curve, it is possible to make inferences about the type of unemployment.
Even if labor supply and demand match quantitatively, they sometimes do not match qualitatively. In this context, unemployment may occur because of qualification mismatch. The mismatch between supply and demand may be caused by the mismatch between the qualifications of the job seeker and the qualifications demanded by the employer, or it may be caused by the fact that labor supply and demand are located in different regions. In this type of unemployment, called structural unemployment, there are open jobs in the labor market on the one hand, and unemployed people on the other. This mismatch can be caused by the inability of employment agencies to provide efficient matching services. In some cases, there is insufficient demand in the labor market to employ the unemployed. In this case, unemployment can be reduced only through cyclical expansion. It can also be said that structural, temporary and cyclical unemployment can exist simultaneously in the labor market. It is important to determine the type of unemployment that is dominant in the labor market. The policies to be implemented differ according to type of unemployment.
First, the theoretical framework underlying the Beveridge Curve is explained. The Beveridge Curve is then estimated and interpreted in terms of time, 26 regions (IBBS-2), and sectors. Moreover, the diffraction points of the Beveridge Curve were identified for 39 quarters, which constitutes a time limitation of the study. Based on the results obtained in this study, various policy recommendations are presented.
In this study, unemployment rates were obtained from TURKSTAT data, and open job rates were obtained from İŞKUR’s open-job statistics surveys. Open job statistics surveys were conducted four times a year in accordance with the EUROSTAT standards. While determining open job rates, the number of current employees in the enterprise and whether the enterprise has open jobs in the reference period were asked. An open-work statistics survey was conducted to determine Turkey’s official open-work rates and share them with EUROSTAT. It can be said that the results of the open job survey can be generalized to Turkey. Since the results of the vacancy surveys were first started in the last quarter of 2014, the data have been started as of this date. Data on unemployment rates and the number of unemployed individuals were obtained from periodic data in the TurkStat database.
According to the results of the study, the set of points where the number of open jobs and unemployed intersects are located at the bottom right of the 45° line. This is because the number of unemployed vacancies was considerably higher than the number of vacancies. Failure to fill the existing vacancies is due to structural and/or frictional (temporary) reasons. Even if the problems arising from structural and temporary reasons are solved and existing vacancies are filled, the seriousness of the unemployment problem will continue. It is only possible for the labor market to approach the point of full employment (approaching the 45° line) through cyclical expansion. In the case of cyclical expansion, structural and temporary unemployment is expected to increase.
During the reference period in Turkey, the set of points on the Beveridge Curve was concentrated in three regions. It was observed that changes in the economy caused shifts in the Beveridge Curve. Some break periods stand out in the transitions between the regions on the Beveridge Curve. In the 3rd quarter of 2018, political and economic events caused the Beveridge Curve to break. After this period, the implementation of Covid-19 measures created a hysteria effect and caused the Beveridge Curve to remain at the bottom right for a long period. With the removal of Covid-19 measures, the Beveridge Curve moved to the upper left and entered an expansionary period. The fact that the points on the Beveridge Curve jump in periods can be interpreted as the labor market being significantly affected by cyclical changes. It can be said that this situation points to the fragile structure of the labor market. The fact that the labor market is affected by cyclical changes makes it difficult to draw a linear Beveridge Curve.
When the Beveridge Curve is analyzed regionally in Turkey, it can be said that it differs in terms of the types of unemployment. Although unemployment is structural in some regions, it is cyclical in others. Policies to solve unemployment should be developed by considering the regional Beveridge Curve. In regions with high unemployment rates and low vacancy rates, the number of vacancies can be increased by providing new investment incentives, expansionary monetary policies, and tax subsidies. In regions with high unemployment and vacancy rates, policies should be developed to solve structural problems. In addition, considering the relationship between unemployment and vacancy rates in new investments to be made in the regions will reduce unemployment and allow firms to access labor more easily.
A significant portion of job vacancies in Turkey are concentrated in the manufacturing sector, while the unemployed are mostly looking for jobs outside the manufacturing sector. Enterprises operating in the manufacturing sector attribute the difficulty in supplying personnel to the lack of sufficient applications in this profession, the lack of personnel with the required professional skills/qualifications, and the lack of experience. The problem in the manufacturing sector is structural unemployment. Employment in the manufacturing sector accounts for a limited share of overall employment. At this point, it is clear that structural problems in the manufacturing sector cannot be generalized to the entire labor market. The relationship between labor supply and demand in sectors other than manufacturing needs to be addressed separately. It has been determined that the number of unemployed people looking for jobs outside the manufacturing sector is considerably higher than the number of open jobs outside the manufacturing sector. Reducing unemployment outside of the manufacturing sector is associated with cyclical expansion. It is understood that structural unemployment is an important problem in Turkey, but even if structural unemployment is solved, the unemployment problem will remain serious. To solve unemployment, cyclical expansion should first be ensured. However, it is also necessary to take measures against structural and temporary unemployment, which is likely to increase as a result of cyclical expansion.
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