Abstract for: Education Mismatch, NEETs, and Macroeconomic Performance

Turkey's NEET rate for youth aged 18–24 stands at roughly one-third — more than twice the OECD average — and has persisted across economic cycles. This points to structural frictions rooted in the mismatch between education system outputs and labor demand rather than cyclical fluctuations alone. Rapid educational expansion has not translated into proportional gains in productive human capital, generating persistent school-to-work congestion and youth detachment. We develop a system dynamics model that links an education pipeline (with track splits and capacity/quality constraints) to a tiered labor market with perception-delayed discouragement and NEET accumulation, and to a parsimonious macro block in which effective labor feeds back into output and education resources. Simulation experiments show that persistent NEET stocks can materially depress effective labor and long-run output in the model. Education-side interventions that expand spending or capacity generate limited improvements and may weaken quality when capacity grows faster than staffing. By contrast, introducing reintegration flows from NEET back to active labor supply produces substantially larger reductions in NEET and stronger macro outcomes, with results sensitive to the assumed re-entry delay. The findings emphasize activation and re-entry mechanisms as first-order policy levers, with reintegration programs generating macro-level payoffs that education-only interventions cannot match. Recovery-driven output gains mainly reflect extensive-margin labor activation rather than productivity deepening, pointing to a trade-off between aggregate and per-capita outcomes. Future extensions should disaggregate tertiary education by field and introduce duration-structured NEET dynamics to capture scarring and hysteresis more realistically. Just for checking the grammatic errors