Youth Unemployment in Turkey

Introduction

Labor market conditions deteriorated in many countries during the global recession. Young people were particularly affected by the economic downturn as it became increasingly difficult for them to find or maintain jobs. This generated a heightened interest from policymakers and researchers with the aim of finding solutions to the problems of the youth in the labor market.

It has been well-documented that unemployment lowers well-being (Clark & Oswald, 1994; Winkelmann & Winkelmann, 1998). In addition to the loss of income, unemployment leads to a fall in well-being as it deprives individuals of all the non-pecuniary benefits that come with employment such as self-confidence and self-esteem. Hence, unemployed people, on average, report lower levels of well-being. Unemployment spells earlier in life may leave scarring effects in the sense that there may be lasting effects of job loss on well-being (Clark, Knabe, & Ratzel, 2011; Knabe & Ratzel, 2011). Experiencing unemployment while young is linked with lower levels of happiness, job satisfaction, wages and health (Bell & Blanchflower, 2010; Gregg & Tominey, 2005), and a higher likelihood of engaging in criminal activities in the future (Fougere, Kramarz, & Pouget, 2009). At the macro level, persistent unemployment causes greater income inequality which undermines the confidence in government and hence leads to social unrest.¹

In addition to the reasons mentioned above, the labor market outcomes of the youth have a pivotal role for Turkey considering its demographic transition. It is estimated that Turkey will go through a demographic period called the “Window of Opportunity” between 2000 and 2025. Accordingly, the working-age population is expected to attain its maximum, which will provide favorable conditions for economic growth.²

The youth unemployment rates in Turkey have steadily been higher than the OECD average since 2000. While several studies focused on the subject of youth unemployment in Turkey, the inactivity of the youth measured by the share of youth that is neither in employment nor education and training - the so-called NEET rate - is a much less studied topic. The category of NEETs is of particular importance as Turkey has the highest share of NEETs among OECD countries. As of 2014, the share of NEETs among 15-19 and 20-24-year-olds in Turkey is 21 percent and 36 percent, respectively.

Another salient characteristic of the Turkish labor market is low labor market attachment among women. As of 2014, female labor participation rate in Turkey is 33.6 percent - the lowest among OECD countries. Female labor force participation is typically lower in urban areas due to the predominance of unpaid family work in rural areas. Migration from rural to urban areas is another factor behind the lower participation of females in urban areas as migrant women fail to meet the skill requirements of the jobs in urban labor markets. The labor force participation rate of the female youth is remarkably low - 27.7 percent in 2014. In addition, young women that do participate seem to face difficulties in finding employment. Since the global recession, the gender gap in unemployment rates has widened highlighting the gender differences in access to jobs. As of 2015, the youth unemployment rate in Turkey stands at 18.5 percent with 22.2 percent and 16.5 percent among females and males, respectively (Turkish Statistical Institute [TURKSTAT], 2016).