Ins and Outs of Unemployment in Turkey

This paper analyzes rates of inflow to and outflow from unemployment for Turkey. From 2006 to 2011, the average rate of exiting unemployment (outflow) within a month was 9.5 percent, the average rate of entering unemployment from out of the labor force was 0.1 percent, and the average rate of transiting from employment to unemployment was 1.1 percent. This paper decomposes changes in unemployment into contributions from inflow and outflow rates, revealing that the volatility of inflow rates is the main driving force of the change in the unemployment rate in Turkey. It also shows that incorporating monthly changes in the labor force into the analysis, as opposed to assuming a constant labor force, affects the results quantitatively.