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THE EMPLOYMENT EFFECT OF THE MINIMUM WAGE: AN EMPIRICAL ANALYSIS FROM TURKEY

Year 2015, Volume: 4 Issue: 1, 49 - 68, 01.01.2015

Abstract

This paper examines the relationship between the minimum wage and employment in Turkey for the years 2004 -14. We investigate whether the national minimum wage has affected the employment rates of workers aged 15-29 by taking regional disparities into account. Our results do not suggest any dis-employment effect of the minimum wage. However, a correlation between the minimum wage and the informal employment rate is confirmed.

Thanks

This paper is an extended version of the third chapter of my PhD dissertation, submitted to the Université Paris XIII-Sorbonne Paris Cité.

References

  • Alatas, V., Cameron, L. A., (2008), “The Impact of Minimum Wages on Employment in a Low-Income Country: a Quasi-Natural Experiment in Indonesia,” Industrial and Labor Relations Review, 61 (2), pp. 201-223.
  • Bakıs, O., Hisarcıklılar, M., Filiztekin, A., (2015), “The Impact of a Minimum- Wage Increase on Employment and School Enrollment: Evidence from Turkey,” Koç University EAF Conference Paper.
  • Bell, L., (1997), “The Impact of Minimum Wages in Mexico and Colombia,” Journal of Labor Economics, 15 (3), pp. 102-135.
  • Bensalem, M., Bensidoun, I., Pelek, S., (2011), “Informal Employment in Turkey: An Overview,” Region et Development, 34, pp. 57-84.
  • Bhorat, H., Kanbur, R., Mayet, N., (2013), “The Impact of Sectoral Minimum-wage Laws on Employment, Wages, and Hours of Work in South Africa,” IZA Journal of Labor & Development, 2 (1), pp. 1-27.
  • Blázquez, M., Llorente, R., Carcedo, J. M.,(2009), “Minimum Wage and Youth Employment Rates in Spain: New Evidence for the Period 2000-2008,” Universidad Autónoma de Madrid, Department of Economic Analysis No. 2009/02.
  • Brown, C., Gilroy, C., Kohen, A., (1982), “The Effect of the Minimum Wage on Employment and Unemployment,” Journal of Economic Literature, 20, pp. 487-528.
  • Calavrezo, O., Pelek, S., (2011), “Les Emplois du Bas de l’échelle Salariale en Turquie: Une Description des Salariés des Secteurs Formels et Informels, Hors Agriculture,” Travail et Emploi, 126.
  • Carr, M., Chen, M. A., (2002), “Globalization and the informal economy: how global trade and investment impact on the working poor,” Working Paper on the Informal Economy No. 1, Geneva: ILO.
  • Ehrenberg, R. G., Smith, R. S., (2009), Modern Labor Economics: Theory and Public Policy, Boston: Pearson Education.
  • Eyraud, F., Saget, C., (2005). The Fundamentals of Minimum-Wage Fixing. International Labor Organization.
  • Fajnzylber, P. (2001). “Minimum-Wage Effects Throughout the Wage Distribution: Evidence from Brazil's Formal and Informal Sectors,” CEDEPLAR Working Paper No. 151.
  • Feliciano, Z. M., (1998), “Does the Minimum Wage Affect Employment in Mexico?” Eastern Economic Journal, Vol. 24, No. 2, pp. 165-180.
  • Gezici, F., Hewings, G. J. (2004). “Regional Convergence and the Economic Performance of Peripheral Areas in Turkey,” Review of Urban & Regional Development Studies, 16 (2), pp. 113-132.
  • Gindling, T. H., Terrell, K, (2009), “Minimum Wages, Wages and Employment in Various Ssectors in Honduras,” Labor Economics, 16 (3), pp. 291-303.
  • Gramlich, E. M., (1976), “Impact of Minimum Wages on Other Wages, Employment, and Family Incomes,” Brookings Papers on Economic Activity, Economic Studies Program, Vol. 7, pp. 409-462.
  • Güven, A., Mollavelioğlu, S.; Dalgıç, B. Ç., (2011), “Asgari Ücret İstihdamı Arttırır mı? 1969-2008 Türkiye Örneği,” ODTÜ Gelisme Dergisi, 38, pp. 147-166.
  • Hamidi, F. E., Terrell, K., (1998), “The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica,” IEA Conference Volume Series, 134, pp. 188-206.
  • Heckman, J. J., Pages, C., (2000), “The Cost of Job-Security Regulation: Evidence from Latin American Labor Markets,” National Bureau of Economic Research, No. w7773.
  • Hussmanns, R.,(2005), “Measuring the Informal Economy: From Employment in the Informal Sector to Informal Employment,” ILO Policy Integration Working Paper No.53.
  • Kaitz, H., (1970), “Experience of the Past: The National Minimum, Youth Unemployment, and Minimum Wages,” US Bureau of Labor Statistics Bulletin, 1657, pp. 30-54.
  • Kanbur, R., (2009), “Conceptualizing Informality: Regulation and Enforcement,” Indian Journal of Labor Economics, 52 (1), pp. 33-42.
  • Korkmaz, A., Çoban, O. (2006). “Emek Piyasasında Asgari Ücret, İssizlik ve Enflasyon Arasındaki Đliskilerin Ekonometrik Analizi: Türkiye Örneği,” Maliye Dergisi, 151, pp. 16-22.
  • Lemos, S. (2009), “Minimum-Wage Effects in a Developing Country,” Labor Economics, 16 (2), pp. 224-237.
  • Lemos, S., (2004), “Minimum-Wage Policy and Employment Effects: Evidence from Brazil,” Economía: Journal of the Latin American and Caribbean Economic Association, 5 (1), pp. 219-266.
  • Majchrowska, A., Zółkiewski, Z., (2012), “The impact of minimum wage on employment in Poland,” Investigaciones Regionales, 24, pp. 211-239. Maloney, W.F., Mendez, J., (2004), “Measuring the Impact of Minimum Wages. Evidence from Latin America,” in Law and Employment: Lessons from Latin America and the Caribbean, pp. 109-130, University of Chicago Press.
  • Mincer, J., (1976), “Unemployment Effects of Minimum Wages,” Journal of Political Economy, 84, pp. 87-104.
  • Montenegro, C., Pagès, C., (2004), “Who Benefits from Labor-Market Regulations? Chile, 1960-1998” in Heckman, J. J., Pagès, C. (Eds), Law and employment: Lessons from Latin America and the Caribbean, pp. 401-434, University of Chicago Press.
  • Neumark, D., Wascher, W., (2006), “Minimum Wages and Employment: A Review of Evidence from the New Minimum-Wage Research,” NBER Working Papers, No. w12663.
  • Papps, K. L., (2012), “The Effects of Social-Security Taxes and Minimum Wages on Employment: Evidence from Turkey,” Industrial and Labor Relations Review, 65 (3), pp. 686-707.
  • Plosser, C. I., (1982), “Government Financing Decisions and Asset Returns,” Journal of Monetary Economics, 9 (3), pp. 325-352.
  • Pratomo, D., (2011), “The Effects of Changes in Minimum Wage on Employment in Indonesia: Regional Panel Data Analysis,” International Research Journal of Finance and Economics, 62, pp. 15-27.
  • Rycx, F., Kampelmann, S., (2013), “Who Earns Minimum Wages in Europe? New Evidence Based on Household Surveys,” Working Papers CEB 13-002.
  • Saget, C., (2001), “Poverty Reduction and Decent Work in Developing Countries: Do Minimum Wages Help?”, International Labor Review, 147 (1), pp. 25-42.
  • Sen, A., Rybczynski, K., Waal, C. V., (2011), “Teen Employment, Poverty, and the Minimum Wage: Evidence from Canada,” Labor Economics, 18 (1), pp. 36-47.
  • Seker, S. D., Küçükbayrak, M., (2012), Türkiye'de Bölgesel Asgari Ücret. Ankara: Kalkınma Bakanlığı.
  • Welch, F., (1976), “Minimum-Wage Legislation in the United States,” in Ashenfelter , O. White, H. (1980). “A Heteroscedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroscedasticity,” Econometrica, 48 (4), pp. 817-838.

THE EMPLOYMENT EFFECT OF THE MINIMUM WAGE: AN EMPIRICAL ANALYSIS FROM TURKEY

Year 2015, Volume: 4 Issue: 1, 49 - 68, 01.01.2015

Abstract

This paper examines the relationship between the minimum wage and employment in Turkey for the years 2004 -14. We investigate whether the national minimum wage has affected the employment rates of workers aged 15-29 by taking regional disparities into account. Our results do not suggest any dis-employment effect of the minimum wage. However, a correlation between the minimum wage and the informal employment rate is confirmed.

References

  • Alatas, V., Cameron, L. A., (2008), “The Impact of Minimum Wages on Employment in a Low-Income Country: a Quasi-Natural Experiment in Indonesia,” Industrial and Labor Relations Review, 61 (2), pp. 201-223.
  • Bakıs, O., Hisarcıklılar, M., Filiztekin, A., (2015), “The Impact of a Minimum- Wage Increase on Employment and School Enrollment: Evidence from Turkey,” Koç University EAF Conference Paper.
  • Bell, L., (1997), “The Impact of Minimum Wages in Mexico and Colombia,” Journal of Labor Economics, 15 (3), pp. 102-135.
  • Bensalem, M., Bensidoun, I., Pelek, S., (2011), “Informal Employment in Turkey: An Overview,” Region et Development, 34, pp. 57-84.
  • Bhorat, H., Kanbur, R., Mayet, N., (2013), “The Impact of Sectoral Minimum-wage Laws on Employment, Wages, and Hours of Work in South Africa,” IZA Journal of Labor & Development, 2 (1), pp. 1-27.
  • Blázquez, M., Llorente, R., Carcedo, J. M.,(2009), “Minimum Wage and Youth Employment Rates in Spain: New Evidence for the Period 2000-2008,” Universidad Autónoma de Madrid, Department of Economic Analysis No. 2009/02.
  • Brown, C., Gilroy, C., Kohen, A., (1982), “The Effect of the Minimum Wage on Employment and Unemployment,” Journal of Economic Literature, 20, pp. 487-528.
  • Calavrezo, O., Pelek, S., (2011), “Les Emplois du Bas de l’échelle Salariale en Turquie: Une Description des Salariés des Secteurs Formels et Informels, Hors Agriculture,” Travail et Emploi, 126.
  • Carr, M., Chen, M. A., (2002), “Globalization and the informal economy: how global trade and investment impact on the working poor,” Working Paper on the Informal Economy No. 1, Geneva: ILO.
  • Ehrenberg, R. G., Smith, R. S., (2009), Modern Labor Economics: Theory and Public Policy, Boston: Pearson Education.
  • Eyraud, F., Saget, C., (2005). The Fundamentals of Minimum-Wage Fixing. International Labor Organization.
  • Fajnzylber, P. (2001). “Minimum-Wage Effects Throughout the Wage Distribution: Evidence from Brazil's Formal and Informal Sectors,” CEDEPLAR Working Paper No. 151.
  • Feliciano, Z. M., (1998), “Does the Minimum Wage Affect Employment in Mexico?” Eastern Economic Journal, Vol. 24, No. 2, pp. 165-180.
  • Gezici, F., Hewings, G. J. (2004). “Regional Convergence and the Economic Performance of Peripheral Areas in Turkey,” Review of Urban & Regional Development Studies, 16 (2), pp. 113-132.
  • Gindling, T. H., Terrell, K, (2009), “Minimum Wages, Wages and Employment in Various Ssectors in Honduras,” Labor Economics, 16 (3), pp. 291-303.
  • Gramlich, E. M., (1976), “Impact of Minimum Wages on Other Wages, Employment, and Family Incomes,” Brookings Papers on Economic Activity, Economic Studies Program, Vol. 7, pp. 409-462.
  • Güven, A., Mollavelioğlu, S.; Dalgıç, B. Ç., (2011), “Asgari Ücret İstihdamı Arttırır mı? 1969-2008 Türkiye Örneği,” ODTÜ Gelisme Dergisi, 38, pp. 147-166.
  • Hamidi, F. E., Terrell, K., (1998), “The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica,” IEA Conference Volume Series, 134, pp. 188-206.
  • Heckman, J. J., Pages, C., (2000), “The Cost of Job-Security Regulation: Evidence from Latin American Labor Markets,” National Bureau of Economic Research, No. w7773.
  • Hussmanns, R.,(2005), “Measuring the Informal Economy: From Employment in the Informal Sector to Informal Employment,” ILO Policy Integration Working Paper No.53.
  • Kaitz, H., (1970), “Experience of the Past: The National Minimum, Youth Unemployment, and Minimum Wages,” US Bureau of Labor Statistics Bulletin, 1657, pp. 30-54.
  • Kanbur, R., (2009), “Conceptualizing Informality: Regulation and Enforcement,” Indian Journal of Labor Economics, 52 (1), pp. 33-42.
  • Korkmaz, A., Çoban, O. (2006). “Emek Piyasasında Asgari Ücret, İssizlik ve Enflasyon Arasındaki Đliskilerin Ekonometrik Analizi: Türkiye Örneği,” Maliye Dergisi, 151, pp. 16-22.
  • Lemos, S. (2009), “Minimum-Wage Effects in a Developing Country,” Labor Economics, 16 (2), pp. 224-237.
  • Lemos, S., (2004), “Minimum-Wage Policy and Employment Effects: Evidence from Brazil,” Economía: Journal of the Latin American and Caribbean Economic Association, 5 (1), pp. 219-266.
  • Majchrowska, A., Zółkiewski, Z., (2012), “The impact of minimum wage on employment in Poland,” Investigaciones Regionales, 24, pp. 211-239. Maloney, W.F., Mendez, J., (2004), “Measuring the Impact of Minimum Wages. Evidence from Latin America,” in Law and Employment: Lessons from Latin America and the Caribbean, pp. 109-130, University of Chicago Press.
  • Mincer, J., (1976), “Unemployment Effects of Minimum Wages,” Journal of Political Economy, 84, pp. 87-104.
  • Montenegro, C., Pagès, C., (2004), “Who Benefits from Labor-Market Regulations? Chile, 1960-1998” in Heckman, J. J., Pagès, C. (Eds), Law and employment: Lessons from Latin America and the Caribbean, pp. 401-434, University of Chicago Press.
  • Neumark, D., Wascher, W., (2006), “Minimum Wages and Employment: A Review of Evidence from the New Minimum-Wage Research,” NBER Working Papers, No. w12663.
  • Papps, K. L., (2012), “The Effects of Social-Security Taxes and Minimum Wages on Employment: Evidence from Turkey,” Industrial and Labor Relations Review, 65 (3), pp. 686-707.
  • Plosser, C. I., (1982), “Government Financing Decisions and Asset Returns,” Journal of Monetary Economics, 9 (3), pp. 325-352.
  • Pratomo, D., (2011), “The Effects of Changes in Minimum Wage on Employment in Indonesia: Regional Panel Data Analysis,” International Research Journal of Finance and Economics, 62, pp. 15-27.
  • Rycx, F., Kampelmann, S., (2013), “Who Earns Minimum Wages in Europe? New Evidence Based on Household Surveys,” Working Papers CEB 13-002.
  • Saget, C., (2001), “Poverty Reduction and Decent Work in Developing Countries: Do Minimum Wages Help?”, International Labor Review, 147 (1), pp. 25-42.
  • Sen, A., Rybczynski, K., Waal, C. V., (2011), “Teen Employment, Poverty, and the Minimum Wage: Evidence from Canada,” Labor Economics, 18 (1), pp. 36-47.
  • Seker, S. D., Küçükbayrak, M., (2012), Türkiye'de Bölgesel Asgari Ücret. Ankara: Kalkınma Bakanlığı.
  • Welch, F., (1976), “Minimum-Wage Legislation in the United States,” in Ashenfelter , O. White, H. (1980). “A Heteroscedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroscedasticity,” Econometrica, 48 (4), pp. 817-838.
There are 37 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Research Articles
Authors

Selin Pelek

Publication Date January 1, 2015
Published in Issue Year 2015 Volume: 4 Issue: 1

Cite

APA Pelek, S. (2015). THE EMPLOYMENT EFFECT OF THE MINIMUM WAGE: AN EMPIRICAL ANALYSIS FROM TURKEY. Ekonomi-Tek, 4(1), 49-68.