The Impact of the Global Economic Crisis on the Turkish Labor Market: A Markov Transition Analysis

This study examines the impacts of the global economic crisis on the dynamics of the Turkish labor market, 2006-2009 Income and Living Conditions Survey (SILC) panel data set and Markov transition analysis. For this purpose, Markov probabilities of annual individual flows between four market labor market states of salaried employment, self-employment, unemployment and inactivity are compared across pre-crisis and crisis period. Further, the analysis is conducted for gender, age and education subcategories to analyze the extent and nature of the crisis on different labor market groups. The results show that the crisis has negatively affected the Turkish labor market, particularly through salaried employment and unemployment channels. During the crisis, the probability of becoming unemployed for salaried workers fell significantly, while the probability of remaining unemployed increased. Moreover, the probability of moving into employment decreased and that into unemployment rose for the inactive group. Women, low skilled and youth are found to be the most negatively affected from the crisis.