Turkish Labor Market Research Articles

The Impact of the 2008 Economic Crisis on Underemployment in Turkey

This study analyses how the economic crisis influenced labour market in Turkey. Our primary aim is to examine how the global economic crisis that broke out in 2007 influenced underemployment in Turkey especially between the years 2007 and 2011. After the crisis some structural changes occurred in the Turkish labour market, which showed improvement in some indicators since 2004. We have observed a relatively rapid change especially in indicators of unemployment and atypical employment. In this study we have described the situation of underemployment since the year 2000 before and after the crisis and then we have tried to figure out what determines underemployment, by using a logistic regression model. Logistic regression or the logit model is a non-linear regression model that is designed for two dependent variables. The model uses the micro data sets of the household labour force surveys for the years from 2006 to 2011, prepared by the Turkish Statistical Institute (TUIK). The study argues that such factors as being male, young, not being a head of the family, having higher education, being divorced, working at home or in a small workplace, working on a wage, working unrecorded, working in rural areas and working in the agricultural sector are elements that increase the probability of underemployment.

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

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.

Quantile Regression and the Gender Wage Gap: Is there a Glass Ceiling in the Turkish Labor Market?

The aim of this paper is to examine the existence of a significant glass ceiling effect in the Turkish labor market. By glass ceiling we mean the existence of a gender wage gap significantly more pronounced at the upper tail of the wage distribution than at the middle or lower tail. In the first step of the analysis, quantile regressions are estimated using data from the Structure of Earnings Survey 2006 conducted by the Turkish Statistical Institute. Several alternative model specifications are explored. In the second step, counterfactual wage distributions are generated, to quantify the role of worker attributes versus returns to these attributes shaping the gender wage gap. The quantile regression estimates and the decomposition analyses consistently show that the gender wage gap is more pronounced at the upper tail of the wage distribution, implying the existence of a glass ceiling effect for women in the Turkish labor market.

Institutional Rigidities and Their Effects on Labor Demand in Turkey

This study analyzes the effects of one of the institutional rigidities in Turkish labour market; job security regulations introduced with new labour code legislated in 2003, on the labour demand. By examining the periods before and after the year 2003 with panel data methods, the changes in the responsiveness of labour demand to the changes in labour costs are investigated. In the study in which TURKSTAT Manufacturing Industry Statistics are used, it is found that the responsiveness of labour demand to the changes in labour costs increased after 2003. It is concluded that the labour costs and job security regulations which influence these costs indirectly are effective on the hiring and firing decisions of employers. When a distinctive analysis based on gender is made, it is found that while the results related demand for male workers are similar with the total demand estimates; the demand for female workers does not have a significant response to the changes in labour costs. Estimates in which the openness variable is included show that openness effects labour demand in negative direction.

Flexicurity and Employee Participation in Workplaces during the Crisis: Turkey Compared to the European Union

Turkey has a mixture of labour market system which provides some deregulated flexible labour market applications and some strict job protection applications characterising same principles with the European Union countries. In this paper, the EU flexicurity approach and Turkish labour market will be analyzed. Extant research on flexicurity has focused primarily on the macro level of analysis. In this research we have examined flexicurity at company level as connecting human relations management (HRM) and industrial relations (IR). We follow the European Commission's definition and argue that company-level flexicurity in the restructuring process is a specific and extraordinary HRM activity. Furthermore, our unit of analysis is management and labour union and works council representatives’ attitudes related to flexicurity applications and employee participation in the EU27 countries and in Turkey as an EU candidate country. This study focuses also on analysis and suggestions for improving restructuring and transition to new employment with the help of company-level flexicurity in the EU27 and in Turkey during the restructuring process of the global crisis with extend to the unification process of Turkey with the EU. As, flexicurity and employee participation applications investigated and compared between Turkey and the EU companies which found that there are a high level of comparability and compliance between Turkish and the EU integral market, at least for leading companies. There are also some characteristic differences between company level practices throughout EU member and candidate countries including Turkey.

Returns to Foreign Language Skills in a Developing Country: The Case of Turkey

Foreign language skills represent a form of human capital that can be rewarded in the labor market. Drawing on data from the Adult Education Survey of 2007, this is the first study estimating returns to foreign language skills in Turkey. We contribute to the literature on the economic value of language knowledge, with a special focus on a country characterized by fast economic and social development. Although English is the most widely spoken foreign language in Turkey, we initially consider the economic value of different foreign languages among the employed males aged 25 to 65. We find positive and significant returns to proficiency in English and Russian, which increase with the level of competence. Knowledge of French and German also appears to be positively rewarded in the Turkish labor market, although their economic value seems mostly linked to an increased likelihood to hold specific occupations rather than increased earnings within occupations. Focusing on English, we also explore the heterogeneity in returns to different levels of proficiency by frequency of English use at work, birth-cohort, education, occupation and rural/urban location. The results are also robust to the endogenous specification of English language skills.

The heterogeneity of informal employment and segmentation in the Turkish labour market

This paper aims at investigating the heterogeneity of informal employment on the Turkish labour market. To circumvent the constraints imposed by the traditional parametric methods, finite mixture models are estimated in order to identify the optimal number of segments within the informal employment and their respective returns to individual characteristics. In particular, it sheds light on the potential voluntary nature of informal employment by comparing the estimated probabilities of segment membership with the theoretical probabilities that would result from a competitive labour market under the hypothesis of income maximization by workers. Results show that the classical self-employed versus informal wage-workers divide is not the best split of informal employment. Furthermore, the two estimated informal employment segments are both less desirable than formal employment. Thus, the hypothesis of labour-market segmentation, even after taking informal-sector heterogeneity into account, seems to hold, supporting the traditional dualistic view of informal employment in the Turkish context.

The Formal/Informal Employment Earnings Gap: Evidence from Turkey

In this study, we examine the formal/informal sector earnings differentials in the Turkish labor market using detailed econometric methodologies and a novel panel data set drawn from the 2006-2009 Income and Living Conditions Survey (SILC). In particular, we test if there is evidence of traditional segmented labor markets theory which postulates that informal workers are typically subject to lower remuneration than similar workers in the formal sector. Estimation of standard Mincer earnings equations at the mean using OLS on a pooled sample of workers confirms the existence of an informal penalty, but also shows that almost half of this penalty can be explained by observable variables. Along wage/self-employment divide, our results are in line with the traditional theory that formal-salaried workers are paid significantly higher than their informal counterparts. Confirming the heterogeneity within informal employment, we find that self-employed are often subject to lower remuneration compared to those who are salaried. Moreover, using quantile regression estimations, we show that pay differentials are not uniform along the earnings distribution. More specifically, we find that informal penalty decreases with the earnings level, implying a heterogeneous informal sector with upper-tier jobs carrying a significant premium and lower-tier jobs being largely penalized. Finally, fixed effects estimation of the earnings gap depict that unobserved individual fixed effects when combined with controls for observable individual and employment characteristics explain the pay differentials between formal and informal employment entirely, thereby implying that formal/informal segmentation may not be a stylized fact of the Turkish labor market as previously thought.

Labor mobility across the formal/informal divide in Turkey

PurposeThis paper, the first one to use individual-level Turkish panel data, examines the labor market transitions in Turkey along the formal/informal employment divide. The purpose of this paper is to contribute to the limited body of empirical evidence available on mobility and informality in the Turkish labor market.Design/methodology/approachToward this end, the authors use Turkish income and Living Conditions Survey panel data for 2006, 2007, 2008 and 2009 to compute the Markov transition probabilities of individuals moving across six different labor market states: formal-salaried (FS), informal-salaried, formal self-employed, informal self-employed, unemployed and inactive. In order to examine the nature of mobility patterns in more detail, the authors then estimate six multinomial logit models individually for each transition adopting a number of individual and employment characteristics as explanatory variables.FindingsThe authors find evidence that mobility patterns are fairly similar across different time spans, the probability of remaining in initial state is higher than the probability of transition into another state for all the labor market states, except for unemployment, there is only very limited mobility into the FS state. Gender, education and sector of economic activity are observed to display significant effects on mobility patterns. The results reveal several relationships between the covariates and likelihood of variant transitions.Research limitations/implicationsThis study provides a comprehensive and detailed diagnosis of the Turkish labor market. The market is observed to display a rather static structure throughout the period considered. The results indicate that a well recognition of underlying dynamics may help policy makers to produce various effective tools for addressing informality.Originality/valueFirst study to analyze labor market mobility across formal/informal sectors using newly available panel data.

Labor Mobility Across the Formal/Informal Divide in Turkey: Evidence from Individual Level Data

Informality has long been a salient phenomenon in developing country labor markets, thus has been addressed in several theoretical and empirical research. Turkey, given its economic and demographic dynamics, provides rich evidence for a growing, heterogeneous and multifaceted informal labor market. However, the existing evidence on labor informality in Turkey is mixed and scant. Along these lines, we aim to extend the existing literature by providing a diagnosis of dynamic worker flows across distinct labor market states and identifying the effects of certain individual and job characteristics on variant mobility patterns. More specifically, we first develop and discuss a set of probability statistics based on annual worker transitions across distinct employment states utilizing Markov transition processes. As Bosch and Maloney (2007:3) argue: “labor status mobility can be assumed as a process in which changes in the states occur randomly through time, and probabilities of moves between particular states are governed by Markov transition matrices”. Towards this end, we will use the novel Income and Living Conditions Survey (SILC) panel data set to compute the transition probabilities of individuals moving across the labor market states of formal-salaried, informal-salaried, formal self-employed, informal self-employed, unemployed and inactive. The transitions analysis is conducted separately for two, three and four year panels pertaining to 2006 to 2007, 2006 to 2008 and 2006 to 2009 transitions; for total, male and female samples; and lastly for total and non-agricultural samples. In this way, we aim to contribute to the limited body of stylized facts available on mobility and informality in the Turkish labor market. Next, we conduct multinomial logit regressions individually for each set of panel to identify the impact of individual characteristics (i.e. gender, age, education level, work experience, sector of economic activity, firm size, number of other household members, having/not having children, rural/urban) underlying worker transitions. The results reveal several relationships between the covariates and likelihood of variant transitions, and are of remarkable importance for designing policy to address labor informality and reduce its negative externalities.

The Formal/Informal Employment Earnings Gap: Evidence from Turkey

In this study, we examine the formal/informal sector earnings differentials in the Turkish labor market using detailed econometric methodologies and a novel panel data set drawn from the 2006-2009 Income and Living Conditions Survey (SILC). In particular, we test if there is evidence of traditional segmented labor markets theory which postulates that informal workers are typically subject to lower remuneration than similar workers in the formal sector. Estimation of standard Mincer earnings equations at the mean using OLS on a pooled sample of workers confirms the existence of an informal penalty, but also shows that almost half of this penalty can be explained by observable variables. Along wage/self-employment divide, our results are in line with the traditional theory that formal-salaried workers are paid significantly higher than their informal counterparts. Confirming the heterogeneity within informal employment, we find that self-employed are often subject to lower remuneration compared to those who are salaried. Moreover, using quantile regression estimations, we show that pay differentials are not uniform along the earnings distribution. More specifically, we find that informal penalty decreases with the earnings level, implying a heterogeneous informal sector with upper-tier jobs carrying a significant premium and lower-tier jobs being largely penalized. Finally, fixed effects estimation of the earnings gap depict that unobserved individual fixed effects when combined with controls for observable individual and employment characteristics explain the pay differentials between formal and informal employment entirely, thereby implying that formal/informal segmentation may not be a stylized fact of the Turkish labor market as previously thought.

Migration of highly qualified German citizens with Turkish background from Germany to Turkey: socio-political factors and individual motives

This article attempts at elucidating the socio-cultural and subjective factors of the emigration of highly qualified German citizens with Turkish background from Germany to Turkey. In doing so, it does not focus only on socio-political aspects, on economic benefits or disadvantages for the sending or the receiving country, but also on individual motives of the emigrants. What motivates highly qualified German citizens with Turkish background to migrate from Germany to Turkey? What kind of strategies do they apply in order to gain ground in the Turkish labour market and in Turkish society? How do they evaluate their accomplished migration to Turkey? These main research questions will be discussed on the basis of recent research results and 12 narrative interviews. The conclusion which this article arrived at is that there are various social-mechanisms and socio-political, economic, cultural as well as personal or psychological factors which motivate highly qualified people to migrate.

Labor Mobility Across The Formal/Informal Divide in Turkey: Evidence from Individual Level Data

Informality has long been a salient phenomenon in developing country labor markets, thus has been addressed in several theoretical and empirical research. Turkey, given its economic and demographic dynamics, provides rich evidence for a growing, heterogeneous and multifaceted informal labor market. However, the existing evidence on labor informality in Turkey is mixed and scant. Along these lines, we aim to extend the existing literature by providing a diagnosis of dynamic worker flows across distinct labor market states and identifying the effects of certain individual and job characteristics on variant mobility patterns. More specifically, we first develop and discuss a set of probability statistics based on annual worker transitions across distinct employment states utilizing Markov transition processes. Towards this end, we will use the novel Income and Living Conditions Survey (SILC) panel data set. The transitions analysis is conducted separately for two, three and four year panels pertaining to 2006 to 2007, 2006 to 2008 and 2006 to 2009 transitions; for total, male and female samples; and lastly for total and non-agricultural samples. In this way, we aim to contribute to the limited body of stylized facts available on mobility and informality in the Turkish labor market. Next, we conduct multinomial logit regressions individually for each set of panel to identify the impact of individual characteristics (i.e. gender, age, education level, work experience, sector of economic activity, firm size, number of other household members, having/not having children, rural/urban) underlying worker transitions. The results reveal several relationships between the covariates and likelihood of variant transitions, and are of remarkable importance for designing policy to address labor informality and reduce its negative externalities.

Intercompany mobbing: the effects of company growth

Exploring the concept of mobbing, we have conducted a study of small and middle sized enterprises (commonly referred to as SMSE). In this study we observed corporate policies of repression and intimidation while taking into consideration the aim of these policies and their possible consequences. The ultimate purpose of this work is to shed light onto forthcoming academic studies of the same topic. Our focus has been the effects of the various presses, forms of harassment and market entry prevention carried out by companies that dominate the market against those companies entering the market and those already competing in the market. To determine these effects on 150 companies that conduct business in Turkey, we created a survey consisting of 15 categories. The results have been depicted with charts and graphs. The conclusion of the investigation has found that many of the attitudes which comprise of mobbing acts can be seen in the mutual behavior of the companies that work in the Turkish labor market. Although there are a number of reasons for the prevalence of the mobbing culture in Turkish business, it’s our belief that the Turkish labor market codes of conduct and regulations influence the perpetuation of ruthless behaviors between different companies.

The Beveridge curve and labour market dynamics in Turkey

This article investigates the dynamics of unemployment and vacancy rates in Turkey during the period 1951 to 2008 by means of a Beveridge Curve (BC). The time-series analysis of unemployment and vacancies as well as two other relevant labour market variables, real wages and real labour productivity, strongly suggests inefficiency in the Turkish labour market. A stable long-run relationship between unemployment rate and vacancy rate is found for Turkey, that is, the existence of a negatively sloped BC is verified. The estimated Turkish BC reflects the structural problems and lack of flexibility in the labour market. The modified BC with real wages and labour productivity reveals that labour productivity has no significant effect on unemployment rate whereas wages have positive and significant effects on the same variable.

Minimum wage is efficient wage in Turkish labor market: TAR–cointegration analysis

This study has two main purposes. First one is the necessity of taking minimum wages into account, if there is a purpose to analyze the relationship between wages and productivity in an economy which has high unemployment rates and informal employment. Second one is about the analyzing method of this relationship. We choose TAR cointegration analysis for this relation. First step of this analysis is testing for stationarity of the variables. However the low power of traditional unit root tests is examined and proved in many studies but not taken into account in TAR cointegration studies in literature. This study shows that traditional unit root tests are unfavorable for the variables which have TAR structures. Because of this shortcoming of traditional unit root tests, these results must be supported with TAR unit root tests.

A Cross-Sectoral Examination of Weekly Hours of Work in the Turkish Labor Market

Making use of individual-level data from the 2008 Household Budget Survey, we examine the variation in the hours of work of Turkish workers during a normal work week. We consider several variables that are likely to define different sectors (or segments) of the labor market in terms of the weekly working hours they demand from the workers. The employment status, sector of employment, and occupation classifications allow for a 3-way analysis-of-variance (ANOVA) of the working hours of the total workforce, whereas the introduction of the public vs. private, white vs. blue-collar, and union vs. non-union member distinctions restricts the analysis to the subsample of regular wage and salary workers. In the absence of their interactions, we find that the formerly-mentioned three factors account for about 18 percent of the variation in weekly hours while the 5-way model explains 22 percent of the variation in the sample of regular employees. We also find that the explanatory power of the models is considerably higher in the case of female workers. In order to gain more insights from the ANOVA models, we also report the underlying regression coefficient estimates and the mean square figures due to each factor in the models. In terms of mean squares, the sector of employment and the public/private status variables turn out to be the largest contributors to the explanatory power of the three and five-factor models, respectively.

Gender issues and the women of the Turkish National Police

This study focuses on the cultural context and gender issues of the policewomen of Ankara, Turkey, a modern, secular, Muslim city. The authors provide a brief history of the status of women in Turkey, and analyze the place of women both in the current Turkish labor market and within the Turkish police. A non‐random, open‐ended survey was done of various ranks of Turkish women police officers in Ankara about their work and personal conditions. The results confirm that women officers have gender work‐related problems.

Gender Wage Discrimination in the Turkish Labor Market: Can Turkey Be Part of Europe?

This paper proposes an estimate of wage discrimination in Turkey relying on a decomposition of the selectivity corrected gender wage differential using 2003 data. In Turkey, the observed average wage gap in terms of the female wage is 38%, of which 63% can be attributed to discrimination. A comparison with results obtained from European countries, using the same methodology, reveals that even though the raw wage gap in Turkey is surprisingly narrow, close to that observed in France and Italy, the discrimination component is high, comparable to that of Spain and Greece.

Demographic and structural effects on labor demand in incomplete markets: Testing “Separability Hypothesis” in Turkish agricultural labor market

Complete markets play an important role in terms of farmers’ response to price incentives and efficient resource allocation. The existence of market failures in rural labor markets can be tested by examining whether the quantity of labor demand is influenced by the household characteristics. By applying existing approaches to separability tests in the literature with a rich rural household survey, this paper suggests that the household characteristics in rural Turkey have an impact on labor demand. Further, we link the nonseparability to some well-known structural problems of Turkish agriculture such as hidden unemployment and small and segmented lands creating constraints on economic decisions. According to our findings, the test fails to reject the separability for relatively larger farms and we do not reject separability for a sub-sample of households having off-farm employment opportunities.