Causality Relationship Between Transfer Expenditures And Labor Force Participation Rate in Turkey

Abstract

Transfer expenditures are public expenditures, which do not make a visible change on national income, but generate mobility in the production of goods and services by those who acquire resources by means of which some resources are exchanged for unrequited hands between individuals and institutions. Transfer expenditures can be a factor that decreases unemployment in the economy as well as it can be a factor that increases unemployment. In this study, the relationship between transfer expenditure and labor force participation rate was analyzed for the period 1988-2017 using annual data of the variables. In this context, the Johansen Cointegration Analysis was firstly used to determine whether there is a long-term relationship between the two variables, followed by the Granger Causality Analysis which investigated the causality relationship between the variables. In the study, it was concluded that there is a one way causality relation from the transfer expenditures to the labor participation rate.

Keywords

• transfer expenditures
• workforce participation rate
• turkish economy
• public expenditures
• employment