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Wage inequality in Turkey, 2002–10

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  • Ozan Bakis
  • Sezgin Polat

Abstract

type="main" xml:id="ecot12058-abs-0001"> This paper studies the evolution of wage inequality in Turkey using household labour force survey data from 2002 to 2010. Between 2002 and 2004, the relative supply of more-educated workers to less-educated workers remained constant while their relative wages decreased in favour of less-educated workers. However, between 2004 and 2010, the relative supply of more-educated workers to less-educated workers rose, while their relative wages remained constant or kept increasing in favour of more-educated workers. This suggests factors other than those implied by a simple supply-demand model are involved, such as skill-biased technical change or minimum wage variations. The decomposition of wage inequality reveals that the price (wage) effect dominates the composition effect particularly in the first period. Our results show that the real minimum wage hike in 2004 corresponds to a major institutional change, which proved to be welfare-increasing in terms of wage inequality. The upper-tail (90/50) wage inequality decreased between 2002 and 2004 and stayed constant thereafter, whereas the lower-tail (50/10) wage inequality decreased throughout the period. Our findings thus provide evidence supporting the institutional argument for explaining wage inequality.

Suggested Citation

  • Ozan Bakis & Sezgin Polat, 2015. "Wage inequality in Turkey, 2002–10," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(1), pages 169-212, January.
    • Handle: RePEc:bla:etrans:v:23:y:2015:i:1:p:169-212
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    File URL: http://hdl.handle.net/10.1111/ecot.2015.23.issue-1
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    Citations

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    Cited by:

    1. Emrehan Aktuğ & Tolga Umut Kuzubaş & Orhan Torul, 2021. "Heterogeneity in labor income profiles: evidence from Turkey," Empirical Economics, Springer, vol. 60(5), pages 2557-2587, May.
    2. Insan Tunali & Murat Güray Kirdar & Meltem Dayioglu, 2019. "Female Labor Force Participation In Turkey: A Synthetic Cohort (Panel) Analysis, 1988-2013," Working Papers 1378, Economic Research Forum, revised 20 Dec 2019.
    3. Carlos Rodriguez-Castelan & Luis F. Lopez-Calva & Nora Lustig & Daniel Valderrama, 2016. "Understanding the Dynamics of Labor Income Inequality in Latin America," Working Papers 1608, Tulane University, Department of Economics.
    4. Gustavo Canavire-Bacarreza & Luis C. Carvajal-Osorio, 2020. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," Journal of Labor Research, Springer, vol. 41(1), pages 128-168, June.
    5. Ozan Bakis & Sezgin Polat, 2023. "Wage inequality dynamics in Turkey," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(3), pages 657-694, August.
    6. Gurleen Popli & Okan Yılmaz, 2017. "Educational Attainment and Wage Inequality in Turkey," LABOUR, CEIS, vol. 31(1), pages 73-104, March.
    7. Mehmet Nazım Tamkoç & Orhan Torul, 2020. "Cross-Sectional Facts for Macroeconomists: Wage, Income and Consumption Inequality in Turkey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(2), pages 239-259, June.
    8. Emine TAHSİN, 2019. "An Investigation of the Palma Ratio for Turkey Both on National and Regional Level," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    9. Polat, Sezgin, 2016. "Some Economic Consequences of Higher Education Expansion in Turkey," MPRA Paper 72602, University Library of Munich, Germany.

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