APPLIED ECONOMICS, vol.52, no.55, pp.6075-6089, 2020 (SSCI)
This study aims to define the main determinants of employment in Turkish manufacturing industry and to analyse foreign trade-employment relationship. Turkey's employment equation is estimated using panel data covering quarterly data for the period 2005-2015 and NACE Rev. 2. three digit manufacturing industry sectors. For this purpose Augmented Mean Group method is modified using instrumental variable techniques. Augmented Mean Group (AMG) method is a newly developed panel estimation method that takes into consideration cross-sectional dependency and parameter heterogeneity. However, the method does not take into consideration endogeneities. We offer a new estimation method 'Instrumental Variables Augmented Mean Group (IV-AMG)' to extent AMG to account for endogeneities and compare the results obtained by the two estimators. Regression analyses show that, when there are endogeneities, AMG method gives implausible results.