A Revisionist View of Labor Market Dynamics in Türkiye

Abstract

Reported unemployment and labor force participation rates do not account for demographic changes in the labor force. However, unemployment and labor force participation rates vary by gender and age group. Changes in the relative shares of these groups in the labor force will affect both labor market measures. Here we adjust both measures for age by gender to calculate an alternative age-adjusted unemployment rate and an age-adjusted labor force participation rate for Türkiye between 1988 and 2022. Two findings for women stand out particularly. Had the age composition of women not changed, the unemployment rate for women in 2022 would have been over three percentage points higher. Likewise, women’s labor force participation rate in 2022 has declined relative to what it would have been had the age composition remained constant since the late 1980s. The demographic change that kept the actual unemployment rates for women lower has been the increase in the labor force share of prime age women, which is the age group that historically has the lowest unemployment rate. Effect on labor force participation rate is driven by a fall in the participation of women aged 15-24.