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How different are the wage curves for formal and informal workers? Evidence from T urkey
Author(s) -
Baltagi Badi H.,
Baskaya Yusuf Soner,
Hulagu Timur
Publication year - 2013
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5957.2012.00478.x
Subject(s) - turkish , unemployment , informal sector , economics , wage , labour economics , demographic economics , survey data collection , economic growth , philosophy , linguistics , statistics , mathematics
This paper estimates wage curves for formal and informal workers using a rich individual level data for T urkey over the period 2005–2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including T urkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a significant role in the economy. Using the Turkish Household Labour Force Survey observed over 26 NUTS 2 regions, we find that real hourly wages of informal workers in T urkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.