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Wage-Productivity Gap in Turkish Manufacturing Sector

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Author Info

  • 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.

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Bibliographic Info

Article provided by Bilgesel Yayincilik in its journal İktisat İşletme ve Finans.

Volume (Year): 27 (2012)
Issue (Month): 316 ()
Pages: 09-31

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Handle: RePEc:iif:iifjrn:v:27:y:2012:i:316:p:09-31

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Web page: http://iif.com.tr

Related research

Keywords: Labor market; Turkey; Search models; Wage-productivity gap;

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References

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  1. Elgin, Ceyhun & Kuzubas, Tolga Umut, 2013. "Wage-productivity gap in OECD economies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 7(21), pages 1-21.
  2. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
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  12. Giovanni Sulis, 2008. "Wage Dispersion and Equilibrium Search Models: Some Evidence from Italy," LABOUR, CEIS, vol. 22(4), pages 593-627, December.
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  15. Tasci, H. Mehmet & Tansel, Aysit, 2005. "Unemployment and Transitions in the Turkish Labor Market: Evidence from Individual Level Data," IZA Discussion Papers 1663, Institute for the Study of Labor (IZA).
  16. Ipek Ilkkaracan & Raziye Selim, 2003. "The role of unemployment in wage determination: further evidence on the wage curve from Turkey," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1589-1598.
  17. Bora Durdu & Emine Boz, 2011. "Emerging Market Business Cycles: The Role of Labor Market Frictions," 2011 Meeting Papers 1092, Society for Economic Dynamics.
  18. Madeline Zavodny, 1999. "Unions and the wage-productivity gap," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 44-53.
  19. Persky, Joseph & Tsang, Herbert, 1974. "Pigouvian Exploitation of Labor," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 52-57, February.
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Citations

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Cited by:
  1. Elgin, Ceyhun & Yucel, Emekcan, 2014. "Determinants of the weight for leisure in preferences," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 8(9), pages 1-26.
  2. Elgin, Ceyhun & Kuzubas, Tolga Umut, 2013. "Wage-productivity gap in OECD economies," Economics Discussion Papers 2013-18, Kiel Institute for the World Economy.

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