Changes In Unemployment During the Inflation Process in Emerging Markets and Scale Variables on Tax Burden
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Abstract
The primary objective of this study is to analyse the changes in labour markets caused by inflationary pressures in emerging market economies and the implications of these changes for public finance. The high inflationary processes observed in emerging market economies have not only threatened price stability but also led to significant fluctuations in unemployment rates. Therefore, in addition to this, this study also aims to establish the rationality of a fundamental structural framework that examines the risk of unemployment becoming more persistent in inflationary environments, particularly due to the structural rigidity of labour markets in emerging markets. It analyses the potential impact of increasing fiscal burdens on the effective tax burden based on economic growth trends. The study focuses on how the scale variables that emerge in tax burdens, particularly in the context of rising unemployment rates and the deepening of structural unemployment in emerging market countries, shape the situation. Inflation in emerging markets increases the effective tax burden, particularly on low- and middle-income groups. This situation both distorts income distribution and negatively impacts aggregate demand, demonstrating a significant correlation with rising unemployment rates. Therefore, the inverse relationship between inflation and unemployment, as reflected in the tax burden in emerging market economies, constitutes the fundamental research question within the analytical framework of this study. Furthermore, the structural changes and upward trends observed in unemployment in emerging markets, when considered alongside the impact of tax-based fiscal drag, provide significant justification for a more precise analysis of the financial fragility and potential socioeconomic costs facing emerging markets. Within this framework, the primary objective of our study's correlation effects analysis is to reveal the asymmetric effects of inflation-related fiscal burdens on socioeconomic strata, to examine the relationship between these effects and macroeconomic indicators, and to contribute to the reassessment of income policies and tax structures in light of the findings.