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The impact of the 2008 crisis on top labor incomes in Turkey: A nonparametric analysis

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  • Tumen, Semih

Abstract

This paper presents a nonparametric analysis of the impact of the 2008 crisis on earnings distribution in Turkey. Using micro-level data from the Household Labor Force Survey (2004-2011), I show that the crisis has operated most visibly above the upper quartile of the earnings distribution. I present three main findings: (1) the share of the top decile -- especially the top percentile -- has increased significantly right after the crisis, (2) the top quartile (i.e., the right tail) of labor incomes in Turkey resembles, on average, a Pareto distribution with a corresponding Gini coefficient of around 0.23, and (3) following the crisis, the earnings differentials have widened above the top quartile and wildly deviated from the Pareto form. I document that the changes observed right after the crisis have mostly been temporary; that is, a normalization process has operated in the aftermath of the crisis. I argue that the health of the domestic banking system might be an important determinant of the effect of large scale financial crises on top labor incomes. A sound banking system can generate income polarization in a country, when global crises lead to asymmetric income reallocations across sectors.

Suggested Citation

  • Tumen, Semih, 2013. "The impact of the 2008 crisis on top labor incomes in Turkey: A nonparametric analysis," MPRA Paper 47112, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47112
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    References listed on IDEAS

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    1. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    2. Thomas Philippon & Ariell Reshef, 2012. "Wages and Human Capital in the U.S. Finance Industry: 1909--2006," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1551-1609.
    3. Anthony B. Atkinson & Salvatore Morelli, 2011. "Economic crises and Inequality," Human Development Research Papers (2009 to present) HDRP-2011-06, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    4. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    5. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2009. "The long-run determinants of inequality: What can we learn from top income data?," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 974-988, August.
    6. Michael Kumhof & Romain Rancière & Pablo Winant, 2015. "Inequality, Leverage, and Crises," American Economic Review, American Economic Association, vol. 105(3), pages 1217-1245, March.
    7. Rolf Aaberge, 2007. "Gini’s nuclear family," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(3), pages 305-322, December.
    8. Fitoussi Jean Paul & Saraceno Francesco, 2010. "Europe: How Deep Is a Crisis? Policy Responses and Structural Factors Behind Diverging Performances," Journal of Globalization and Development, De Gruyter, vol. 1(1), pages 1-19, January.
    9. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 205-229.
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    More about this item

    Keywords

    Earnings differentials; inequality; the 2008 crisis; Turkish Household Labor Force Survey.;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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