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The role of unemployment in wage determination: further evidence on the wage curve from Turkey

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Author Info
Ipek Ilkkaracan
Raziye Selim
Abstract

This paper presents an empirical estimation of the correlation between wages and regional unemployment rates in Turkey, more specifically it explores the role of regional unemployment rates in wage determination. The analysis builds upon a series of recent empirical studies on the wage-unemployment relationship, now commonly known as 'the wage curve', a downward sloping curve in wage-unemployment space. The existing studies are for most part in advanced market economies, while this paper presents one of the few attempts at a wage curve analysis within the context of a developing market economy. A cross-sectional estimation of micro level individual wage data for the Turkish labour market in 1994, suggest a statistically significant negative correlation between wages and regional unemployment rates. Separate regressions for men and women, however, show a wage curve to exist only in the male labour market. The study also presents the results on other variables of wage determination such as returns to schooling, returns to age, job tenure, gender, industrial and occupational affiliation of the worker, economic sector and union status.

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Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 14 (September)
Pages: 1589-1598
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Handle: RePEc:taf:applec:v:35:y:2003:i:14:p:1589-1598

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rebitzer, James B, 1988. "Unemployment, Labor Relations, and Unit Labor Costs," American Economic Review, American Economic Association, vol. 78(2), pages 389-94, May. [Downloadable!] (restricted)
  2. Christofides, Louis N & Oswald, Andrew J, 1992. "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 985-1002, August. [Downloadable!] (restricted)
    Other versions:
  3. Lawrence F. Katz & Alan B. Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," NBER Working Papers 3667, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  5. Onaran, Uzlem, 2002. "Measuring Wage Flexibility: The Case of Turkey before and after Structural Adjustment," Applied Economics, Taylor and Francis Journals, vol. 34(6), pages 767-81, April. [Downloadable!] (restricted)
  6. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  7. Johansen, Kare, 1999. "Insider Forces in Wage Determination: New Evidence for Norwegian Industries," Applied Economics, Taylor and Francis Journals, vol. 31(1), pages 137-47, January. [Downloadable!] (restricted)
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  10. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May. [Downloadable!] (restricted)
  11. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November. [Downloadable!] (restricted)
  12. Blanchflower, David G & Oswald, Andrew J, 1990. " The Wage Curve," Scandinavian Journal of Economics, Blackwell Publishing, vol. 92(2), pages 215-35.
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    • Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
    • David G. Blanchflower & Andrew J. Oswald, 1990. "The Wage Curve," NBER Working Papers 3181, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    • David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, December.
  13. P Canziani, 1997. "The Wage Curve in Italy and Spain. Are European Wages Flexible?," CEP Discussion Papers dp0375, Centre for Economic Performance, LSE.
  14. Blackaby, David H & Hunt, Lester C, 1992. "The "Wage Curve" and Long-term Unemployment: A Cautionary Note," The Manchester School of Economic & Social Studies, Blackwell Publishing, vol. 60(4), pages 419-28, December.
  15. Janssens, Stefan & Konings, Jozef, 1998. "One more wage curve: the case of Belgium," Economics Letters, Elsevier, vol. 60(2), pages 223-227, August. [Downloadable!] (restricted)
  16. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June. [Downloadable!] (restricted)
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  17. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May. [Downloadable!] (restricted)
  18. Hoddinott, John, 1996. "Wages and Unemployment in an Urban African Labour Market," Economic Journal, Royal Economic Society, vol. 106(439), pages 1610-26, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Simonetta Longhi & Peter Nijkamp & Jacques Poot, 2004. "Spatial Heterogeneity and the Wage Curve revisited," Tinbergen Institute Discussion Papers 04-054/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Marisa Bucheli & Cecilia González, 2007. "An estimation of the wage curve for Uruguay," Documentos de Trabajo (working papers) 1107, Department of Economics - dECON. [Downloadable!]
  4. Michael Landesmann & Hermine Vidovic & Vladimir Gligorov & Robert Stehrer & Anna Iara, 2008. "Western Balkan Countries: Adjustment Capacity to External Shocks, with a Focus on Labour Markets," Research Reports 352, The Vienna Institute for International Economic Studies, wiiw. [Downloadable!]
  5. Özlem Onaran & Nursel Aydiner-Avsar, 2006. "The controversy over employment policy: Low labor costs and openness, or demand policy? A sectoral analysis for Turkey," Department of Economics Working Papers wuwp097, Vienna University of Economics and B.A., Department of Economics. [Downloadable!]
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