Notice the impact of the services sector is insignificant over the period. In the long run, the services sector has helped growth but, due to the limited time series that is available, the dynamism of the services sector is not captured over the period 2006 to 2011 where GVA data are available.

The average poverty elasticity of GVA growth across NUTS2 regions is only -0.19 and -0.11 from 2008 to 2010 during the crisis. The elasticity improved after the crisis from 2010 to 2011 at -0.68 (See Table 26). GVA excludes subsidies and taxes and this is one possible reason for why GVA does not exhibit poverty reducing impacts in the expected sectors: services and industry. Government subsidies are much higher in services and industry, therefore GVA is not a full measure of the size of the industrial and services sectors. Changes in the amount of government subsidy into reach region can bias the results and also generate sporadic trends.

Changes in employment have a much larger explanatory power on poverty reduction than growth in GVA. As Azevedo and Atamanov (2014) find, employment and job creation are the main drivers of poverty reduction. When examining regressions of an identical structure but using employment variables, there is a much stronger story on the importance of the services sector as a channel of poverty reduction.

Employment data are available for more years than the value-added series and can also be more informative of welfare changes since employment and wages result in direct poverty reduction effects. The services sector is the only sector that maintained positive employment growth every year from 2006 to 2013 (Figure 11). It is impressive that during the crisis period, employment did not decrease in aggregate. Only employment in industry declined from 2008 to 2009 but this was offset by growth in services and agricultural employment. Agriculture was beneficial in some regions as people fell back into agriculture during the financial crisis, which is why there is strong growth in agriculture from 2009-2010 and also from 2010-2011. However, as the country began its recovery from the crisis, employment in agriculture shrank while the services sector remained strong in attracting and retaining workers.

Figure 11. Employment Trends by Sector <!-- Start of picture text --> Number of employees by sector Growth of employment by sector<br> 30,000 12.0%<br>10.0%<br>10.0% 8.8%<br> 25,000 8.0% 7.9%<br>8.0%<br>5.6% 5.7%<br> 20,000 6.0% 4.2% 4.1%4.4%<br>5,473 5,537 5,680 5,383 5,920 6,389 6,453 6,738 4.0% 2.8% 3.1% 2.6% 3.0%<br> 15,000 2.0% 1.2% 1.6% 1.6% 1.0%<br> 10,000 10,048 10,328 10,491 10,660 10,981 11,597 12,262 12,762 0.0%<br> 5,000 -2.0% -0.6% -0.7% -1.3%<br>4,902 4,873 5,023 5,234 5,694 6,148 6,106 6,024 -4.0%<br> - -6.0%<br>2006 2007 2008 2009 2010 2011 2012 2013 -5.2%<br>2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13<br>Agriculture Services Industry Agriculture Services Industry<br>Growth Rate (%)<br>Number of employees (,000)<br><!-- End of picture text --> _Source:_ Ministry of Finance – General Directorate of Public Accounts Figure 24 also illustrates regional changes in the number of employed by sector from 2006 to 2013. Agriculture employment grew in the south west and central regions while reducing in the north. Employment in industry increased in every region, though at moderate levels. Employment in the services sector showed the most impressive growth; over 700,000 in Istanbul region. Only North regions of TR83 and TR90 experienced declines in the number of jobs in services from 2006 to 2013.

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