Impact of Demographic Transition on Labour Productivity in Turkey: A Time Series Analysis

This thesis examines the long-run relationship between the demographic transition and labour productivity in Turkey using annual data for 1990 to 2023. Labour productivity is measured by real GDP per capita at purchasing power parity, and the demographic transition by the total fertility rate and the net migration rate; the share of the population aged 65 and over is treated separately because of its near-collinearity with fertility. A vector error correction model estimated with the Johansen procedure identifies a single long-run equilibrium relationship, in which a lower fertility rate is associated with higher long-run productivity, in line with the demographic transition. The adjustment coefficients show that labour productivity behaves as a weakly exogenous, driving variable, while the fertility rate carries the burden of adjustment, so demographic adjustment operates mainly through fertility. Demographic shocks account for a moderate but growing share of the forecast variance of productivity, and the model forecasts productivity more accurately than a naive benchmark. The findings give an empirically grounded account of how demographic change and labour productivity are linked in Turkey as its population ages.