Job creation and job destruction in Turkey

Abstract This paper analyzes Turkey’s labor market dynamics from 2006 to 2021 through job flow analysis of administrative data from all non-financial firms registered with social security institutions. We specifically examine how firm characteristics influence employment dynamics over business cycles, with our analysis covering key events such as the 2008 global recession, the 2018 currency crisis, and the initial phase of the COVID-19 pandemic. Our results indicate a highly dynamic labor market, with gross job reallocation rates ranging from 34 to 44%, comparable to those of other emerging economies but higher than rates in Anglo-Saxon and transition countries. The high rates of excess job reallocation in Turkey suggest substantial reshuffling within the job structure, especially in the construction sector, where job creation persistence is notably low. A similar pattern is observed among low-technology and low-to-medium-technology manufacturing firms, which exhibit higher reallocation rates. Micro-firms are the primary drivers of job creation and destruction, with these rates declining as firms grow larger or older. While exposure to international competition appears relevant, with import intensity negatively associated with job creation and positively with job destruction, no systematic link is found between export intensity and job reallocation rates.