The Relationship Government Size-Unemployment: The Test of Abrams Curve for Turkish Economy


ASLAN A. , KULA F.

MALIYE DERGISI, no.159, pp.155-166, 2010 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: Issue: 159
  • Publication Date: 2010
  • Title of Journal : MALIYE DERGISI
  • Page Numbers: pp.155-166

Abstract

The Abrams Curve, discovered by University of Delaware Economist Burton A. Abrams, provides direct evidence of a relationship between the size of a country's government and its unemployment rate. The empirical relationship between government size and unemployment in Turkey is of particular importance from the policy point of view. This paper analyzes how the size of the government sector affects unemployment in terms of educational level. By using data from Turkey for the period 2000: 1 to 2007: 3, it is found that a large government sector is likely to decrease unemployment rate and the Granger causality test results based on vector error-correction models (VECM) indicate unidirectional causality running from government size to high school or technical high school graduate unemployment rate while mutual interactions are observed for secondary or technical school and tertiary graduate unemployment rate.