The Relationship between Labor Force Participation Rate and Unemployment Rate in Turkey: An Analysis Based on Gender and Education Level

According to the economic theory, changes in the unemployment rate can have two different effects on the labor force participation rate. In the periods of economic stagnation when the unemployment rate increases, the decrease in the labor force participation rate is explained by the discouraged worker effect; while the increase in labor force participation rate is explained by the added worker effect. In this study, it was investigated which of these effects is dominant in Turkey’s labor market, using data from January 2014 to July 2017. To achieve more detailed information on the relationship between labor force participation rate and the unemployment rate, the econometric analysis process was conducted using the data based on education level and gender. Findings indicate that the added worker effect is dominant for highly or vocation-educated women, while there was no significant long-term relationship between labor force participation and unemployment rate for high-skilled men