A central challenge for the Turkish economy in avoiding falling into a middle-income trap is to achievea shift away from (what the World Bank has labeled) a “know-who” toward a “know-how” economy. The latter implies not just investments in education but also putting a more educated workforce to productive use.

The recently released employment statistics from the Turkish statistical institute showed two worrisome features of how unemployment has evolved over the last year, beyond the headline 1.9 percentage point jump in the unemployment rate from 10.8% in 2015 to 12.7% in 2016.

1) The increase in the unemployment rate is to a significant degree driven by individuals with higher education degrees, a group that experienced a 3 percentage point increase in the unemployment rate (see graph below). In contrast, less educated brackets show more modest upticks in unemployment. Arguably, this is different from a standard economic downturn which would normally affect blue-collar workers to a similar, if not larger, extent than white-collar workers. (Interestingly,  there’s also a 4.2 percentage point increase among vocational high school graduates.)

2) The unemployment rate change between 2015 and 2016 among women is twice the magnitude to that for men: 2.8 versus 1.4 percentage points respectively.  Moreover, this is mostly driven by higher-educated women with at least a high-school degree, and changes in the unemployment rate varying between 3.8-4.8 percentage points.

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