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The Effect of Foreign Trade on Real Wages: The Case of Turkey

Author

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  • Hacer Simay Karaalp-Orhan
  • Orhan Sevcan Günes

Abstract

The main objective of this article is to test the existence of Stolper-Samuelson theorem between Turkey and EU-15 countries for the period 2005-2014. According to the results, a significant relationship is found between exports and real wages especially in the labour and raw intensive sectors of Turkish exports, where Turkey is relatively labour and raw abundant in comparison with the EU-15. Test results indicate a long-run relationship between exports of manufacture of wearing apparel, food, textiles and real wages, a unidirectional Granger causality relationship is found from exports to wages in manufacture of wearing apparel and food. The international trade between Turkey and the EU-15 validates to some extent the Stolper-Samuelson theorem.

Suggested Citation

  • Hacer Simay Karaalp-Orhan & Orhan Sevcan Günes, 2016. "The Effect of Foreign Trade on Real Wages: The Case of Turkey," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(4), pages 411-426.
    • Handle: RePEc:prg:jnlpep:v:2016:y:2016:i:4:id:559:p:411-426
    DOI: 10.18267/j.pep.559
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    References listed on IDEAS

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    1. James Melvin & Robert Waschik, 2001. "The neoclassical ambiguity in the specific factor model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(3), pages 321-337.
    2. Martins, Pedro S. & Opromolla, Luca David, 2009. "Exports, Imports and Wages: Evidence from Matched Firm-Worker-Product Panels," IZA Discussion Papers 4646, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    weak exogenity; Turkey; real wages; Granger causality; exports;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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