The Relationship between Economic Growth and Unemployment in EU27 and Türkiye: Panel Cointegration Analysis
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Unemployment, Economic Growth, Okun's Law, Panel CointegrationAbstract
The primary objective of this study is to examine the relationship between unemployment and economic growth, which are indicators of significant political and economic importance. This relationship, first analyzed by A. Okun, has gained considerable relevance in recent years. One of the key indicators that economies focus on is economic growth. For economic growth to reduce unemployment, it is necessary for the growth to be production-based. Growth that does not generate employment cannot reduce the unemployment rate. In such a case, no relationship can be established between these two variables. For Okun's law to hold, economic growth must have a negative effect on unemployment. This study empirically investigates the relationship between unemployment and economic growth. The study uses the panel cointegration method and focuses on the EU-27 countries and Turkey, covering the period from 2000 to 2019. The results of the cross-sectional dependence test indicate the presence of cross-sectional dependence among the series. Additionally, the results of the homogeneity test reveal that the model is heterogeneous. The panel cointegration test results suggest that no cointegration relationship exists, meaning there is no long-term relationship between the series.
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