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The Turkish Wage Curve : Evidence from the Household Labor Force Survey (Türkiye’de Ücret Egrisi: Hanehalki Isgücü Anketi’nden Bulgular)

Author

Listed:
  • Badi H. Baltagi
  • Yusuf Soner Baskaya
  • Timur Hulagu

Abstract

This paper examines the Turkish wage curve using individual data from the Household Labor Force Survey (HLFS) including 26 NUTS-2 regions over the period 2005 - 2008. When the local unemployment rate is treated as predetermined, there is evidence in favor of the wage curve only for younger and female workers. However, if the lagged unemployment rate is used as an instrument for current unemployment rate, we find an unemployment elasticity of -0.099. We also find a higher elasticity for younger, less educated, low experienced workers than for older, more educated and more experienced workers. Another important finding is that the wages of females in Turkey are significantly more responsive to local unemployment rates than their male counterparts.

Suggested Citation

  • Badi H. Baltagi & Yusuf Soner Baskaya & Timur Hulagu, 2011. "The Turkish Wage Curve : Evidence from the Household Labor Force Survey (Türkiye’de Ücret Egrisi: Hanehalki Isgücü Anketi’nden Bulgular)," Working Papers 1106, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:wpaper:1106
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    References listed on IDEAS

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    1. Blanchflower, David G. & Oswald, Andrew J., 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA).
    2. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, January.
    3. Ipek Ilkkaracan & Raziye Selim, 2003. "The role of unemployment in wage determination: further evidence on the wage curve from Turkey," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1589-1598.
    4. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2000. "The East German wage curve 1993-1998," Economics Letters, Elsevier, vol. 69(1), pages 25-31, October.
    5. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1.
    6. Ozlem Onaran, 2002. "Measuring wage flexibility: the case of Turkey before and after structural adjustment," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 767-781.
    7. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
    8. David G. Blanchflower & Andrew Oswald, 1995. "International Wage Curves," NBER Chapters,in: Differences and Changes in Wage Structures, pages 145-174 National Bureau of Economic Research, Inc.
    9. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
    10. Blanchflower, David G & Oswald, Andrew J, 1994. "Estimating a Wage Curve for Britain: 1973-90," Economic Journal, Royal Economic Society, vol. 104(426), pages 1025-1043, September.
    11. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    12. Baltagi, Badi H. & Blien, Uwe, 1998. "The German wage curve: evidence from the IAB employment sample," Economics Letters, Elsevier, vol. 61(2), pages 135-142, November.
    13. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
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    Citations

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    Cited by:

    1. Reinhold Kosfeld & Christian Dreger, 2017. "Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers," MAGKS Papers on Economics 201729, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Konyalı, Gonca, 2012. "Wage Curve Evidence From Turkey’s 2007-2009 Income and Living Conditions Survey," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 199-210.
    3. Badi H. Baltagi & Yusuf Soner Baskaya & Timur Hulagu, 2013. "How different are the wage curves for formal and informal workers? Evidence from Turkey," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 271-283, June.
    4. Yusuf Soner Baskaya & Timur Hulagu, 2011. "Informal-Formal Worker Wage Gap in Turkey : Evidence From A Semi-Parametric Approach," Working Papers 1115, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    5. Ipek Ilkkaracan & Haluk Levent & Sezgin Polat, 2013. "Exploring different measures of wage flexibility in a developing economy context: the case for Turkey," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(3), pages 297-315, May.
    6. Blien, Uwe & Messmann, Susanne & Trappmann, Mark, 2012. "Do reservation wages react to regional unemployment?," IAB Discussion Paper 201222, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Cholezas, Ioannis & Kanellopoulos, Nikolaos C., 2015. "Labour market reforms in Greece and the wage curve," Economics Letters, Elsevier, vol. 136(C), pages 19-21.
    8. repec:taf:deveza:v:34:y:2017:i:1:p:1-16 is not listed on IDEAS
    9. Dieter von Fintel, 2016. "Wage flexibility in a high unemployment regime: spatial heterogeneity and the size of local labour markets," Working Papers 09/2016, Stellenbosch University, Department of Economics.
    10. Dieter von Fintel, 2017. "Institutional wage-setting, labour demand and labour supply: Causal estimates from a South African pseudo-panel," Development Southern Africa, Taylor & Francis Journals, vol. 34(1), pages 1-16, January.

    More about this item

    Keywords

    Wage Curve; Fixed Effects; Regional Labor Markets; Two-Stage Least Squares;

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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