THE EFFECT OF HEALTH AND EDUCATION EXPENDITURES ON THE EMPLOYMENT: EMPIRICAL EVIDENCE FROM TÜRKİYE

Abstract

This research delves into the influence of human capital investments on employment in Türkiye between 2000 and 2021. We first employ the Autoregressive Distributed Lag (ARDL) method to assess both the short and long-term impacts of human capital investments on employment. Then, the Pairwise Granger Causality test is applied to explore the causality among the variables. According to the long run coefficient, a 1% rise in government education and health expenditures and GDP growth rate leads to a 1.27%, 1.17% and 0.76% increase in employment in Türkiye, respectively. Additionally, The Pairwise Granger Causality test results show that government education expenditure on human capital influences employment in Türkiye and vice versa as well as a causal relation between the employment rate and inflation rate. In conclusion, Türkiye should increase its expenditure on health and education as these investments serve as a vital role in enhancing the level of human capital and welfare of the population.