Fertility, Employment and Capital Accumulation: A Case Study For Turkey

In the last two decades Turkish fertility rates have been steadily decreasing. This paper is an attempt to examine the effects of a change in fertility rates on population structure, labor supply, and employment in relation to physical capital stock for the next four decades. This study also evaluates the effects of a possible reversal change in fertility rates on the variables mentioned above. The study is carried out in three stages. In the first stage, population of Turkey is projected with Leslie matrix defined by age-specific fertility rates and survival rates. Projections are repeated for different fertility rates. In the second stage, physical capital stock per employed person is forecasted using time series data. In the third stage, the predictions obtained through the first two stages are combined. Thus, the question of what should be the warranted growth rates of physical capital stock in order to employ labor force projected under different fertility rates is answered. According to the results, increases in fertility rates lead to an increase in labor supply with a 15 year lag, even if fertility rates have remained unchanged in their current level. The physical capital stock growth rate that is necessary for the employment of the extra labor supply emanating from an increase in fertility rates is found to be at least 5 %. This was higher than the actual growth rate of physical capital stock realized in the last decade which was approximately 4 %.