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Is the Efficiency Wage Hypothesis Valid for Developing Countries? Evidence from the Turkish Cement Industry

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  • Seref Saygili

Abstract

The efficiency wage hypothesis is tested by using one of the recently developed methods to measure technical efficiency. We use panel data on 40 Turkish cement plants for the period 1980-1995. The predictions of the efficiency wage hypothesis are tested in two ways: estimation of wage augmented production frontiers and the simultaneous estimation of a production function together with inefficiency effects. Our empirical analysis shows that the wage level is one of the significant factors contributing to the output and technical efficiency of plants in the cement industry in Turkey.

Suggested Citation

  • Seref Saygili, 1998. "Is the Efficiency Wage Hypothesis Valid for Developing Countries? Evidence from the Turkish Cement Industry," Studies in Economics 9810, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:9810
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    Cited by:

    1. Binaykumar Ray & B. Sudhakara Reddy, 2012. "Technical productivity analysis for cement industry at firm level," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-002, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Simarmata, Djamester A., 2012. "Appropriate Wage to Economies of Scale for Growth: An Exploratory Study on New Paradigm for Development," MPRA Paper 41581, University Library of Munich, Germany.
    3. Jhon Alexander Méndez Sayago, 2014. "Plusvalía, salario real y eficiencia del trabajo en el sector manufacturero en Colombia," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, June.
    4. Justesen, Michael & Verner, Dorte, 2007. "Factors impacting youth development in Haiti," Policy Research Working Paper Series 4110, The World Bank.
    5. Ahmad Jafari Samimi, 2011. "Efficiency Wage Hypothesis: The Case Study of Iran's Manufacturing Industries," Journal of Social and Development Sciences, AMH International, vol. 1(5), pages 157-164.

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    More about this item

    Keywords

    Efficiency Wage; Stochastic Production Function with Composed Errors; Technical Efficiency;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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