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How Different are the Wage Curves for Formal and Informal Workers? Evidence from Turkey

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  • Badi H. Baltagi
  • Yusuf Soner Baskaya
  • Timur Hulagu

Abstract

This paper presents wage curves for formal and informal workers using a rich individual level data for Turkey over the period 2005-2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including Turkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a signifcant role in the economy. Using the Turkish Household Labor Force Survey observed over 26 NUTS-2 regions, we find that real hourly wages of informal workers in Turkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.

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Bibliographic Info

Paper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series Working Papers with number 1216.

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Date of creation: 2012
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Handle: RePEc:tcb:wpaper:1216

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Keywords: Formal/Informal Employment; Wage Curve; Regional Labor Markets;

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Cited by:
  1. Sahin, Afsin & Tansel, Aysit & Berument, Hakan, 2011. "Output-Employment Relationship across Sectors: A Long- versus Short-Run Perspective," MPRA Paper 46875, University Library of Munich, Germany, revised 07 Jun 2012.

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