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Macroeconomic Shocks and Labor Supply in Emerging Countries. Some Lessons from Turkey

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Abstract

We investigate the general equilibrium effects of minimum consumption constraints over labor supply decisions. Within a simple static model, a minimum consumption constraint modifies labor supply decisions of unskilled workers, generating the well-known added worker effect. The results of the model help to analyze the Turkish labor market where added worker effects were observed following the 2001 crisis. We investigate the asymmetric effects of the crisis, using the Household Budget Surveys that cover the period between 2002 and 2005. The substantial decrease in real wages has increased labor supply for unskilled labor, especially for women.

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  • Sezgin Polat & Francesco Saraceno, 2010. "Macroeconomic Shocks and Labor Supply in Emerging Countries. Some Lessons from Turkey," Documents de Travail de l'OFCE 2010-36, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:1036
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    1. Ashenfelter, Orley, 1980. "Unemployment as Disequilibrium in a Model of Aggregate Labor Supply," Econometrica, Econometric Society, vol. 48(3), pages 547-564, April.
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    3. McKenzie, David J., 2003. "How do Households Cope with Aggregate Shocks? Evidence from the Mexican Peso Crisis," World Development, Elsevier, vol. 31(7), pages 1179-1199, July.
    4. Calvo, Guillermo A. & Vegh, Carlos A., 1999. "Inflation stabilization and bop crises in developing countries," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 24, pages 1531-1614, Elsevier.
    5. Tim Maloney, 1987. "Employment Constraints and the Labor Supply of Married Women: A Reexamination of the Added Worker Effect," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 51-61.
    6. Cerrutti, Marcela, 2000. "Economic Reform, Structural Adjustment and Female Labor Force Participation in Buenos Aires, Argentina," World Development, Elsevier, vol. 28(5), pages 879-891, May.
    7. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
    8. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-572, July.
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    Cited by:

    1. Ayça Akarçay Gürbüz & Sezgin Polat & Mustafa Ulus, 2014. "In Limbo: Exploring Transition to Discouragement," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 527-551, September.
    2. Yusuf Soner Baskaya & Gonul Sengul, 2012. "Turkiye’de Emek Piyasasinin Cevrimsel Hareketinin Cinsiyet Bazinda Analizi," CBT Research Notes in Economics 1209, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. Serkan Degirmenci & Ipek Ilkkaracan, 2013. "Economic Crises and the Added Worker Effect in the Turkish Labor Market," Economics Working Paper Archive wp_774, Levy Economics Institute.

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    More about this item

    Keywords

    Added worker; Taxation; Bivariate Probit; Labor Supply; Turkish Labor Market;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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