Abstract

The purpose of this paper is to investigate the relationship between real exchange rate and the employment market by using the panel cointegration analysis with datafrom Turkey which adopted a flexible exchange rate regime for the period of the study. According to the FMOLS and DOLS panel results, there is a cointegration between RER (real exchange rate) and aggregate employment. The FMOLS individual results indicate that except for mining and finance, there is a cointegration between RER and employment. DOLS individual cointegration test results rejects null hypothesis of no cointegration for all the employment variables except for mining and electricity.

Key words: Employment, exchange rate, cointegration.