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Relative Stagnation alla Turca

  • Tasso Adamopoulos
  • Ahmet Akyol

    ()

    (Economics York University)

Turkey is the only founding member of the OECD that has not converged to the US in terms of per-capita GDP since 1950: its real GDP per capita is stuck at 20% of that of the US. At a proximate level, we show that Turkey's relative stagnation over the past 50 years is due to: (1) the relative decline in its labor force participation, and (2) the relative stagnation of its TFP. We argue that the first fact is due to policies of high personal income taxation, and high social security contributions for both employees and employers. The second fact we argue is due to price support policies in agriculture, which distorted the allocation of resources in favor of agriculture, thereby delayed the process of the structural transformation. We develop a dynamic general equilibrium model with agricultural and non-agricultural sectors. The production of the non-agricultural good can take place in the market or the household sector. We show the extent to which these policies can account quantitatively for Turkey's relative stagnation

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File URL: http://repec.org/sed2006/up.9577.1140034978.pdf
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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 703.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:703
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  1. Richard Rogerson, 2007. "Structural Transformation and the Deterioration of European Labor Market Outcomes," NBER Working Papers 12889, National Bureau of Economic Research, Inc.
  2. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
  3. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics.
  4. Ananth Seshadri & Rodolfo Manuelli, 2005. "Human Capital and the Wealth of Nations," 2005 Meeting Papers 56, Society for Economic Dynamics.
  5. Francesco Caselli, 2005. "Accounting for Cross-Country Income Differences," CEP Discussion Papers dp0667, Centre for Economic Performance, LSE.
  6. Andres Erosa & Tatyana Koreshkova & Diego Restuccia, 2006. "On the aggregate and distributional implications of productivity differences across countries," Working Paper 06-02, Federal Reserve Bank of Richmond.
  7. Cole, Harold L. & Ohanian, Lee E. & Riascos, Alvaro & Schmitz, James Jr, 2005. "Latin America in the rearview mirror," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 69-107, January.
  8. Edward C. Prescott, 2002. "Prosperity and Depression: 2002 Richard T. Ely Lecture," Working Papers 618, Federal Reserve Bank of Minneapolis.
  9. A. Erinc Yeldan, 1998. "On Structural Sources of the 1994 Turkish Crisis: a CGE modelling analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 12(3), pages 397-414.
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