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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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  • Polat, Sezgin & Saraceno, Francesco, 2010. "Macroeconomic Shocks and Labor Supply in Emerging Countries. Some Lessons from Turkey," GIAM Working Papers 10-3, Galatasaray University Economic Research Center, revised 2010.
  • Handle: RePEc:ris:giamwp:2010_003
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    References listed on IDEAS

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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.
    2. Robert J. Shiller, 1997. "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 159-228.
    3. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
    4. 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.
    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. Francine D. Blau & Lawrence M. Kahn, 2007. "Changes in the Labor Supply Behavior of Married Women: 1980–2000," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 393-438.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.

    More about this item

    Keywords

    Added worker; Taxation; Bivariate Probit; Labor Supply; Turkey;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • 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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