Efficiency of the Turkish Labor Market

Abstract

This chapter examines the employment efficiency in the Turkish labor market between 1988 and 2021 and measures the efficient level of Turkish employment by 2030, using the data obtained from TUİK (Turkish Statistical Institute), employing an alternative methodology named “Regressive Envelopment Analysis” or simply REA. The study uses a two-stage analysis where the first stage measures how efficiently the labor force is created from the pool of economically active population, while the second stage measures how efficiently the labor force is put to employment. The overall (1988-2021) employment efficiency average is found to be about 94%, and the bulk of the efficiency loss is the result of the first stage, which is fundamentally shaped by the structural unemployment. It is suggested that long-term unemployment rates, even at the efficient employment levels, will steadily rise from an average of 8% in 2000 to 12% in 2030 for both sexes, but especially for females, nearing 14%.