The Relationship Between Firm Formation and Unemployment: Evidence from Türkiye

Muhammad Moiz () and Şerife Genç Ileri
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Muhammad Moiz: Department of Economics, Ibn Haldun University, Başakşehir 34480, Istanbul, Türkiye
Şerife Genç Ileri: Department of Economics, Faculty of Management, Istanbul Technical University, Macka 34367, Istanbul, Türkiye

Economies, 2025, vol. 13, issue 2, 1-22

Abstract: This paper aims to explore the relationship between firm formation and unemployment using regional and city-level Turkish data. We focus on the post-2008 financial crisis period and analyze the effects of unemployment and other control variables on firm formation at NUTS-II and NUTS-III regions of Türkiye. We estimate a fixed-effects panel data model and control for GDP per capita, urbanization, population density, patents, high school education, and higher education. Our results suggest that there is a significant positive effect of unemployment on new firm formation. The analysis concerning the converse relation, the impact of firm formation on unemployment, reveals no significant results at the NUTS-II level; however, a significant negative relationship is found at the city level with 4- and 5-year lags.

Keywords: unemployment; firm formation; Schumpeter effect; refugee effect; regional analysis (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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