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Wage gap and dispersion in a partially unionized structure in Turkey

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Abstract

In this paper, we estimate the magnitude of the union–nonunion wage differential and the effect of unions on wage dispersion in the case of Turkey. Using the newly available, individual-level microdata for Turkey in 2004 and 2008, we find out that union membership does have a positive wage differential and this differential is higher at lower quantiles. Furthermore, it seems that the unions systematically reduce the variance of wages for the relevant period, though the magnitudes of the effects are smaller when we control for the work force characteristics.

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Notes

  1. Although there are no reliable data about the extent of informal sector, it is well recognized that it is quite high in relative to the average of the advanced countries. The rate of labor force participation (those working or actively looking for work) in Turkey is low, at around 45 % of the working age population compared to over 70 % in the EU in 2008. This means that the ratio of workers to the entire working population, when the self-employed and unpaid family workers are taken into consideration, is relatively low. And the share of small and medium sized enterprises (SMEs) in the Turkish economy is quite large: firms with less than ten employees accounting for about 60 % (EU average is 30 %) of all workers (ETUC 2010).

  2. However, there are exceptions to the above rule. Despite a relatively decentralised structure with lower union density (France, Italy and Spain), bargaining coverage levels are high. This low-density high-coverage phenomenon occurs because other institutional mechanisms are used to extend bargaining coverage to nonunion firms and sectors.

  3. Total labor earnings (including bonus and extra payments) are computed as hourly labor earnings, i.e., dividing monthly total labor income (total compensation) by the number of hours worked.

  4. Even though the mining sector is naturally one of the most unionized sectors in Turkey, the fraction of the miners in the National Household Surveys conducted by TUIK is extremely small.

  5. This mainly originated from the liberalization policies that have been implemented in Turkey for two decades (e.g., deregulation in labor markets, declining public sector and becoming a more open economy).

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Authors and Affiliations

  1. Istanbul, Turkey

    Ensar Yilmaz

  2. Sakarya University, Adapazari, Turkey

    Sayin San

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  1. Ensar Yilmaz
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Correspondence to Ensar Yilmaz.

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Yilmaz, E., San, S. Wage gap and dispersion in a partially unionized structure in Turkey. Empir Econ 52, 577–597 (2017). https://doi.org/10.1007/s00181-016-1087-3

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