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Evaluating the Impact of the Post-2008 Employment Subsidy Program in Turkey

Author

Listed:
  • Balkan, Binnur

    (Central Bank of Turkey)

  • Baskaya, Yusuf Soner

    (University of Glasgow)

  • Tumen, Semih

    (Amazon)

Abstract

This paper investigates the employment effects of a targeted subsidy scheme implemented in Turkey following the 2008 crisis. The Turkish government started a subsidy program in 2008 to generate new employment for younger men and all women, which are the relatively disadvantaged groups in the Turkish labor markets. The program puts men of age 18-29 and all women into the treatment group, while men of age 30 and above are placed into the control group. We use a nationally representative micro-level dataset and a difference-in-differences approach to estimate the causal effect of this program. On aggregate, the subsidy program seems to be ineffective in increasing the employment probabilities of those individuals in the target group. However, when heterogeneity is accounted for by dividing the treatment group into several sub-groups, we observe that the program has been notably effective on some of those sub-groups. In particular, the increase in employment probability is high for older women, while a weaker positive effect is observed for younger women and almost no effect is detected for younger men. The effect on older women is subject to further heterogeneity: the program has increased the employment probabilities of low-educated and/or low-skill older women rather than the high-educated and/or high-skill ones.

Suggested Citation

  • Balkan, Binnur & Baskaya, Yusuf Soner & Tumen, Semih, 2016. "Evaluating the Impact of the Post-2008 Employment Subsidy Program in Turkey," IZA Discussion Papers 9993, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9993
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    References listed on IDEAS

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    Cited by:

    1. Cilasun, Seyit Mumin & Acar, Elif Oznur & Gunalp, Burak, 2015. "The Effects of Labor Market Reforms on the Labor Market Dynamics in Turkey," MPRA Paper 64767, University Library of Munich, Germany.
    2. Aksu, Ege & Erzan, Refik & Kırdar, Murat Güray, 2022. "The impact of mass migration of Syrians on the Turkish labor market," Labour Economics, Elsevier, vol. 76(C).
    3. 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.
    4. Binnur Balkan & Seyit M|min Cilasun & Belgi Turan, 2016. "The Impact of the Turkish Employment Subsidy Programs on Increasing the Level of Social Protection For Women," Working Papers 1022, Economic Research Forum, revised Jun 2016.
    5. Luis Alberiko Gil-Alana & Zeynel Abidin Ozdemir & Aysit Tansel, 2019. "Long Memory in Turkish Unemployment Rates," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(1), pages 201-217, January.
    6. Gizem Akar & Binnur Balkan & Semih Tümen, 2013. "Overview of Firm-Size and Gender Pay Gaps in Turkey: The Role of Informal Employment," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(3), pages 1-21, September.
    7. Moundir Lassassi & Aysit Tansel, 2020. "Female labor force participation in five selected MENA countries: An age-period-cohort analysis," Koç University-TUSIAD Economic Research Forum Working Papers 2018, Koc University-TUSIAD Economic Research Forum.
    8. Binnur Balkan & Semih Tumen, 2016. "Firm-Size Wage Gaps along the Formal-Informal Divide: Theory and Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 235-266, April.
    9. Güneş A. Aşık, 2018. "Overlooked benefits of consumer credit growth: impact on formal employment," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-35, December.
    10. Luis Alberiko Gil-Alana & Zeynel Abidin Ozdemir & Aysit Tansel, 2019. "Long Memory in Turkish Unemployment Rates," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(1), pages 201-217, January.
    11. Aşık,Güneş & Bossavie,Laurent Loic Yves & Kluve,Jochen & Nas Ozen,Selin Efsan & Nebiler,Metin & Oviedo Silva,Ana Maria, 2022. "The Effects of Subsidizing Social Security Contributions : Job creation or Informality Reduction ?," Policy Research Working Paper Series 9904, The World Bank.
    12. Yasemin Dildar, 2020. "Targeting Women’s Employment: Do Employment Subsidies Work? Evidence from Turkey," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(1), pages 5-25, March.
    13. Halit Basbuga & Hatip Kitapci, 2020. "The Effects of the Incentive for Young and Female Employment Regulated By Law No. 6111 and Macroeconomic Variables on Employment, Informal Employment, and," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 178-186.
    14. Halit Basbuga & Hakan Kitapci & Enes Cengiz Oguz & Yusuf Elkoca, 2022. "Active Labour Market Policies and Macroeconomic Variables on Employment, Informal Employment and Income Effects: The case of Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 12(2), pages 72-83, March.

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    More about this item

    Keywords

    employment subsidies; treatment effects; difference-in-differences; Turkish micro data;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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