Causality Relationship Between Transfer Expenditures and Labor Force Participation Rate in Turkey

Abstract

Transfer expenditures do not make a visible change on national income, but cause transfer of some revenues between some individuals and institutions. Transfer expenditures are public expenditures that generate mobility in production due to the expenditures made by those who earn these revenues. In addition, transfer expenditures can be a factor that decreases unemployment in the economy as well as it can be a factor that increases unemployment. In this study, the relationship between transfer expenditure and labor force participation rate is analyzed for the period 1988-2017 using annual data. In this context, the Johansen Cointegration Analysis is firstly used to determine whether there is a longterm relationship between the two variables, followed by the Granger Causality Analysis is used for the investigate the causality relationship between the variables. In the study, it is concluded that there is a one-way causality relation from the transfer expenditures to the labor participation rate.