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Economic Crises and the Added Worker Effect in the Turkish Labor Market

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  • Serkan Degirmenci
  • Ipek Ilkkaracan

Abstract

Turkish economic growth has been characterized by periodic crises since financial liberalization reforms were enacted in the early 1990s. Given the phenomenally low female labor force participation rate in Turkey (one of the lowest in the world) and the limited scope of the country's unemployment insurance scheme, there appears to be ample room for a female added worker effect as a household strategy against unemployment shocks under economic crises. Using micro data from household labor force surveys for the 2004-10 period, we examine the extent to which an unemployment shock to the primary male earner instigates female members of the household to move from nonparticipant status to labor market participation. This paper differs from the earlier few studies on the added worker effect in Turkey in a number of aspects. First, rather than simply basing the analysis on a static association between women's observed participation status and men's observed unemployment status in the survey period, we explore whether there is a dynamic relationship between transitions of women and men across labor market states. To do this, we make use of a question introduced to the Household Labor Force Survey in 2004 regarding the survey respondent's labor market status in the previous year. This allows us to explore transitions by female members of households from nonparticipant status in the previous year to participant status in the current year, in response to male members making a transition from employed in the previous period to unemployed in the current period. We explore whether and to what extent the primary male earner's move from employed to unemployed status determines the probability of married or single female full-time homemakers entering the labor market. We estimate the marginal effect of the unemployment shock on labor market transition probability for the overall sample as well as for different groups of women, and hence demonstrate that the effect varies widely depending on the particular characteristics of the woman--for example, her education level, age, urban/rural residence, and marital and parental status. We find that at the micro level an unemployment shock to the household increases the probability of a female homemaker entering the labor market by 6-8 percent. The marginal effects vary substantially across different groups of women by age, rural or urban residence, and education. For instance, a household unemployment shock increases by up to 34 percent the probability that a university graduate homemaker in the 20-45 age group will enter the labor market; for a high school graduate the probability drops to 17 percent, while for her counterpart with a secondary education the marginal effect is only 7 percent. Our estimate of the total (weighted) number of female added workers in the crisis years shows that only around 9 percent of the homemakers in households experiencing an unemployment shock enter the labor market. Hence we conclude that, while some households experiencing unemployment shocks do use the added worker effect as a coping strategy, this corresponds to a relatively small share. We attribute this finding to the deeply embedded structural constraints against female labor market participation in Turkey.

Suggested Citation

  • 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.
  • Handle: RePEc:lev:wrkpap:wp_774
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    References listed on IDEAS

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    1. 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).
    2. Cem Baslevent & Ozlem Onaran, 2003. "Are Married Women in Turkey More Likely to Become Added or Discouraged Workers?," LABOUR, CEIS, vol. 17(3), pages 439-458, September.
    3. Ashenfelter, Orley, 1980. "Unemployment as Disequilibrium in a Model of Aggregate Labor Supply," Econometrica, Econometric Society, vol. 48(3), pages 547-564, April.
    4. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
    5. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
    6. Sherwin Rosen, 1992. "Distinguished Fellow: Mincering Labor Economics," Journal of Economic Perspectives, American Economic Association, pages 157-170.
    7. Prieto-Rodriguez, Juan & Rodriguez-Gutierrez, Cesar, 2003. "Participation of married women in the European labor markets and the "added worker effect"," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(4), pages 429-446, September.
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    More about this item

    Keywords

    Labor Supply; Economic Crisis: Turkey;

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • 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

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