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Wage-Productivity Gap in Turkish Manufacturing Sector

Author

Listed:
  • Ceyhun ELGİN

    (Boğaziçi Üniversitesi)

  • Tolga Umut KUZUBAŞ

    (Boğaziçi Üniversitesi)

Abstract

Perfectly competitive labor markets without distortionary taxes combined with a profit maximizing behavior of firms should imply that real wages should equal marginal product of labor (MPL). In this paper, we study the Turkish manufacturing industry and find that there exist a significant widening gap between real wages and marginal product of labor over the period 1950-2009. Using different time-series econometric techniques we show that this gap is foremost correlated with the unemployment rate over the period of study. To provide an economic mechanism for this relationship we build a search model of employment with endogenous bargaining. Our model implies that this observation is consistent with declining bargaining power of the workers, which is also supported by the data.

Suggested Citation

  • Ceyhun ELGİN & Tolga Umut KUZUBAŞ, 2012. "Wage-Productivity Gap in Turkish Manufacturing Sector," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(316), pages 09-31.
    • Handle: RePEc:iif:iifjrn:v:27:y:2012:i:316:p:09-31
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    Cited by:

    1. Elgin, Ceyhun & Kuzubas, Tolga Umut, 2013. "Wage-productivity gap in OECD economies," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-21.
    2. Ozlem Albayrak, 2020. "Household Consumption, Household Indebtedness, and Inequality in Turkey: A Microeconometric Analysis," Economics Working Paper Archive wp_954, Levy Economics Institute.
    3. Attar, M. Aykut, 2021. "Growth, distribution and dynamic inefficiency in Turkey: An analysis of the naïve neoclassical theory of capital," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 20-30.
    4. Elgin, Ceyhun & Yucel, Emekcan, 2014. "Determinants of the weight for leisure in preferences," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-26.
    5. Thomas Ziesemer, 2023. "Labour-augmenting technical change data for alternative elasticities of substitution: growth, slowdown, and distribution dynamics," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 32(4), pages 449-475, May.
    6. Gomez, Francisco & Mac-Auliffe, Raimundo & Rosselot, Santiago, 2014. "Brecha Productividad – Salario: Un Acercamiento Por Rama," Estudios Nueva Economía, Estudios Nueva Economía, vol. 3(1), pages 44-49.
    7. Elveren, Adem Yavuz & Özgür, Gökçer, 2018. "The Effect of Military Expenditures on the Profit Rates in Turkey," MPRA Paper 88848, University Library of Munich, Germany.

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    More about this item

    Keywords

    Labor market; Turkey; Search models; Wage-productivity gap;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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