Unemployment and Vacancies in Turkey: The Beveridge Curve and Matching Function

In this paper, we study the Beveridge curve and the matching function in Turkey. The analysis illustrates that the empirical Beveridge curve for the 2005:M1-2013:M2 period posits a negative relationship between unemployment and vacancies. When the sample period is divided into sub-periods around the recent global financial crisis, the unemployment-vacancies pairs are found to follow a counterclockwise trajectory (around the empirical Beveridge curve) during the transition from trough into the recovery. The estimation of the matching function implies that the congestion externality of unemployment on job finding is in line with the literature. Disaggregation of the Beveridge curve suggests that recent labor market reforms were beneficial for the targeted employment groups.