Labor Supply Elasticity of Turkish Labor Market: 2003 – 2011

Abstract

This paper examines the wage elasticity of aggregated labor supply of Turkish households for the period of 2003 – 2011 employing the Lucas&Rapping (1969) Model. In their original work, nonwage income variable is excluded from the estimated model. Nonwage income variable of the theoretical model which is left out in the estimated model is reintroduced to the estimated model using a different methodology. A Pseudo panel data set is generated by aggregating household level data to form cohorts consist of sequential vigintiles by the nonwage income of the households using the Turkish Household Budget Surveys. This approach enables the cross sectional data to become a pseudo panel and hence benefits from the advantages of a panel data set. On the other hand, whether the nonwage income in Turkey being one of the determinants of the labor supply or not is tested by the statistical significance of the model. The wage elasticity of the labor supply (intensive margin) is estimated utilizing Lucas & Rapping (1969) aggregated labor supply model using the pseudo panel data. The elimination of the fixed effects of each cohort by the appropriate estimation method achieves the labor supply elasticity excluding the nonwage income effect. The study reveals the fact that the model estimated with aggregated data of households as sequential vigintiles of their nonwage income, provides a statistically significant estimation of the wage elasticity of the labor supply in Turkey. In this context, the wage elasticity of labor supply is estimated with Arellano and Bover / Blundell and Bond system GMM estimator, using the Lucas&Rapping (1969) model and it is found to be as small as 0,06

Keywords

• wage elasticity of labor supply, pseudo panel, intensive marigin, nonwage income

Türkiye İşgücü Piyasası’nın İşgücü Arz Esnekliği: 2003 – 2011

Abstract

Çalışmada, Türkiye’deki hanelerin toplulaştırılmış işgücü arzlarının ücret esnekliği 2003 – 2011 yılları için Lucas ve Rapping (1969) modeli ile tahmin edilmektedir. Lucas ve Rapping (1969) çalışmalarında, ücret dışı geliri bir değişken olarak tahmin edilen modelin dışında bırakmaktadır. Kuramsal modelden dışlanan ücret dışı gelir değişkeni çalışmamız kapsamında modele farklı bir yöntem kullanılarak dahil edilmektedir. Bu çerçevede, TÜİK Hane Halkı Bütçe Anketleri mikro verileri ücret dışı gelir düzeylerine göre %5’lik sıralı gruplar halinde toplulaştırılarak yapay gruplar oluşturulmakta ve yapay panel veri seti elde edilmektedir. Bu yolla, yatay kesit veriler panel veri haline getirilmekte ve panel veri setlerinin mümkün kıldığı tahmin avantajlarından faydalanılmaktadır. Diğer taraftan, Türkiye’de ücret dışı gelir düzeyinin, işgücü arzını belirleyen etkenler arasında yer alıp almadığı da ücret dışı gelir grupları için oluşturulan modelin anlamlılığı ile sınanmaktadır. Elde edilen veri seti kullanılarak Lucas ve Rapping (1969) toplulaştırılmış işgücü arzı modeli ile Türkiye için çalışılan saat olarak işgücü arz esnekliği (yoğunluk marjı) tahmini yapılmaktadır. Oluşturulan 20 adet ücret dışı gelir grubunun her birine özgü birimsel sabit etkilerin, kullanılan uygun tahmin yöntemi yardımıyla arındırılması, ücret dışı gelir etkisinden arındırılmış model ile işgücü arz esnekliğine ulaşılabilmesini mümkün kılmaktadır. Çalışma sonucunda, ücret dışı gelire göre yapılan hane toplulaştırmasının Türkiye’nin işgücü arzı ücret esnekliğinin tahmini açısından anlamlı olduğu sonucuna ulaşılmaktadır. Bu çerçevede haneler itibarıyla toplulaştırılmış işgücü arzının ücret esnekliği, Lucas ve Rapping (1969)’in dinamik makro işgücü arzı modeli kullanılarak Arellano ve Bover / Blundell ve Bond sistem GMM ile tahmin edilmekte ve esnekliğin oldukça küçük bir değer aldığı (0,06) sonucuna ulaşılmaktadır

Keywords

• işgücü arzının ücret esnekliği, yapay panel, yoğunluk marjı, ücret dışı gelir

References

1. Altonji, J.G. (1986) “Intertemporal Substitution in Labour Supply: Evidence from Micro Data” Journal of Political Economy , 94, 177- 215.
2. Arellano, M. ve Bond, S. (1991) “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations” Review of Economic Studies, 58: 277–297.
3. Arellano, M. ve Bover, O. (1995) “Another Look at the Instrumental Variable Estimation of Error- components Models” Journal of Econometrics, 68: 29–51.
4. Arellano M. ve Meghir C. (1992) “Female Labour Supply and On-the-Job Search: An Empirical Model Estimated Using Complementary Data Sets” The Review of Economic Studies, 59(3), 537-559.
5. Arrufat J.L. ve Zabalza, A. (1986) “Female Labor Supply with Taxation, Random Preferences, and Optimization Errors” Econometrica, 54(1), 47-63.
6. Baltagi, B. H. (2005). Econometric Analysis of Panel Data (3. baskı). New York: Wiley.
7. Bargain, O. (2005) “On Modelling Household Labor Supply with Taxation” IZA Working Paper1455, Bonn, IZA.
8. Bianchi, M., Gudmundsson, B.R. ve Zoega, G. (2001) “Iceland’s Natural Experiment in Supply-Side Economics” The American Economic Review, 91(5), 1564-1579.

9. Blau, F. ve Kahn L. (2005) “Changes in the Labor Supply Behavior of Married Women: 1980–2000” NBER Working Paper 11230, NBER.
10. Blau, F. D. ve Kahn, L.M. (2006) “Changes in the Labor Supply Behaviorof Married Women: 1980-2000” IZA Discussion Paper No. 2180, IZA.
11. Blundell, R. ve Bond, S. (1998) Initial Conditions and Moment Restrictions in Dynamic Panel Data Models” Journal of Econometrics, 87: 115–143.
12. Blundell, R. W., Duncan, A.S. ve Meghir, C. (1998) “Estimating Labour Supply Responses using Tax Policy Reforms” Econometrica, 66, 827-861.
13. Blundell, R. ve MaCurdy, T. (1999) “Labour Supply: A Review of Alternative Approaches”. O. Ashenfelter ve D. Card (eds), Handbook of Labour Economics V.3. Elsevier.
14. Blundell, R., Antoine B., ve Guy L. (2011) “Labor Supply and the Extensive Margin” American Economic Review, 101(3), 482-86.
15. Bowen, W. G. ve Finegan, T. A. (1965) “Labor Force Participation and Unemployment” A. M. Ross (eds), Employment Policy and the Labor Market, University of California Berkeley Press.
16. Browning, M., Deaton, A. ve Irish, M. (1985) “A Profitable Approach to Labor Supply and Commodity Demands over the Life Cycle” Econometrica, 53, 503 - 543.
17. Browning, M., Hansen, L. ve Heckman, J. (1999) “Micro Data and General Equilibrium Models” J.B. Taylor ve M. Woodrord (eds), Handbook of Macroeconomics V.1, Elsevier.
18. Bull, C. ve Frydman, R. (1983) “The Derivation and Interpretation of the Lucas Supply Function” Journal of Money, Credit and Banking, 15(1), 82 - 95.
19. Cahuc, P. ve Zylberberg A. (2004) Labor Economics, Cambridge, Massachusetts: The MIT Press.
20. Chetty, R., Guren, A., Manoli, D. ve Weber, A. (2011) “Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins?” The American Economic Review, 101(3), 471-475.
21. Deaton, A. (1985) “Panel Data From Time Series of Cross-Sections” Journal of Econometrics, 30(1985), 109-126.
22. Eissa, D. ve Hoynes, H. W. (1998) “The Earned Income Tax Credit and the Labor Supply of Married Couples” NBER Working Papers 6856, National Bureau of Economic Research, Inc.
23. Fiorito, R. ve Zanella, G. (2012) “The Anatomy of the Aggregate Labor Supply Elasticity” Review of Economic Dynamics, 15(2). 171-187.
24. Fortin, B. ve Guy, L. (1997) “A Test of the Unitary and Collective Models of Household Labour Supply” The Economic Journal, 107(443), 933 – 955.
25. French, E. (2005) “The Efects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour” Review of Economic Studies, 72, 395 – 427.
26. Ghez, G. ve Becker, G. (1975) “A Theory of the Allocation of Time and Goods Over the Life Cycle” The Allocation of Time and Goods over the Life Cycle, National Bureau of Economic Research, Inc.
27. Gruber, J. ve Saez, E. (2002) “The Elasticity of Taxable Income: Evidence and Implications” Journal of Public Economics, 84(1), 1-32.
28. Ham, J. C. (1986) “Testing Whether Unemployment Represents Intertemporal Labour Supply Behaviour” The Review of Economic Studies, 53(4), 559 – 578.
29. Ham, J. C., ve Reilly, K.T. (2002) “Testing Intertemporal Substitution, Implicit Contracts, and Hours Restriction Models of the Labor Market Using Micro Data” American Economic Review, 92(4): 905-927.
30. Hansen, G.D. (1985) “Indivisible Labor and the Business Cycle” Journal of Monetary Economics, 16(3), 309-327.
31. Hansen, G.D. ve Wright, R. (1992) “The Labor Market in Real Business Cycle Theory” Federal Reserve Bank of Minneapolis Quarterly Review, Spring, 2-12.
32. Harris, R.D. F. ve Tzavalis, E. (1999) “Inference for Unit Roots in Dynamic Panels Where the Time Dimension is Fixed” Journal of Econometrics, 91(2), 201-226.
33. Hart, M. K. (1987) “Specification Tests of the Lucas- Rapping Model” The American Economic Review, 77(3), 442 – 445.
34. Heckman, J. (1974) “Shadow Prices, Market Wages, and Labor Supply” Econometrica, 42(4), 679 – 694.
35. Heckman, J.J. (1978) “A Partial Survey of Recent Research on the Labor Supply of Women” American Economic Review, 68(2), 200-207.
36. Heckman, J. (1979) “Sample Selection Bias as a Specification Error” Econometrica, 47(1), 153 - 161.
37. Heckman, J. J. ve MaCurdy, T. E. (1980) “A Life Cycle Model of Female Labour Supply” Review of Economic Studies, 47(1), 47 - 74.
38. Heckman, J. J. ve MaCurdy, T. E. (1982) “Corrigondum on A Life Cycle Model of Female Labour Supply” Review of Economic Studies, 49(4), 659 - 660.
39. Hsiao, C. (2003). Analysis of Panel Data. New York: Cambridge University Press.
40. ILO (2015) Women and Men in the Informal Economy http://laborsta.ilo.org/informal_econ omy_E.html (26.02.2015)
41. Jacob, B A. ve Ludwig, J. (2012) “The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery” American Economic Review, 102(1), 272-304.
42. Kosters, M. (1966) Income and Substitution Effects in a Family Labor Supply Model. Santa Monica, California: RAND Corp.
43. Kuroda, S. ve Yamamoto, I. (2008) “Estimating Frisch Labor Supply Elasticity in Japan” J. Japanese Int. Economies, 22(2008), 566 – 585.
44. Levin, A., Lin, C.F., Chu, C-S.J. (2002) “Unit root tests in panel data: Asymptotic and finite sample properties” Journal of Econometrics, 108, 1–22.
45. Lucas, R. E., ve Rapping, L. A. (1969) “Real Wages, Employment, and Inflation” Journal of Political Economy, 77(5), 721-54.
46. Lucas, R. E. ve Rapping, L. A. (1972) “Unemployment in the Great Depression: Is There a Full Explanation?” Journal of Political Economy, 80(1), 186 – 191.
47. MaCurdy, T. (1981) “An Empirical Model of Labor Supply in Life Cycle Setting” Journal of Political Economy , 89, 1059 - 1085.
48. Pencavel, J. (2002) “A Cohort Analysis of the Association between Work Hours and Wages Among Men” Journal of Human Resources. 37(2), 251-274.
49. Pesaran, M. H. (2004) “General Diagnostic Tests for Cross Section Dependence in Panels” University of Cambridge, Faculty of Economics, Cambridge Working Papers in Economics No. 0435.
50. Pistaferri, L. (2003) “Anticipated and Unanticipated Wage Changes, Wage Risk and Intertemporal Labour Supply” Journal of Labour Economics, 21(3), 729 – 754.
51. Prescott, E. C. (2004) “Why do Americans Work so much more than Europeans?” Quarterly Review, Federal Reserve Bank of Minneapolis, July, 2-13.
52. Prescott, E. C. ve Wallenius, J. (2012) “Aggregate Labor Supply” Federal Reserve Bank of Minneapolis Quarterly Review, 35(2), 2-16.
53. Rees, A. (1970) “On Equilibrium in Labor Markets. Journal of Political Economy” 78(2), 306 – 310.
54. Reynaga, N.C. ve Rendon, S. (2012) “The Frisch Elasticity in Labor Markets with high Job Turnover” IZA Discussion Papers 6991, Institute for the Study of Labor (IZA).
55. Rogerson, R. (1988) “Indivisible Labor, Lotteries and Equilibrium” Journal of Monetary Economics, 21(1), 3-16.
56. Roodman, D. (2006) “How to Do xtabond2: An Introduction to “Difference”and “System” GMM in Stata” Center for Global Development Working Paper Number 103.
57. Saez, E. (2004) “Reported Incomes and Marginal Tax Rates, 1960- 2000: Evidence and Policy Implications” Tax Policy and the Economy, 18, 117-184.
58. Schneider, F. (2005) “Shadow Economies Around the World: What Do We Really Know?” European Journal of Political Economy, 21, 598–642.
59. Sigeze, Ç. (2012) “Türkiye’de Hanelerin Tüketim Harcamaları: Panel Verilerle Talep Sisteminin Tahmini” Yayınlanmamış Yüksek Lisans Tezi, Çukurova Üniversitesi Sosyal Bilimler Enstitüsü, Adana.
60. Tunalı, İ. ve Başlebent, C. (2010) “Female labor supply in Turkey” Altuğ, S. ve Filiztekin (eds), The Turkish Economy : the Real Economy, Corporate Governance and Reform London, Routledge.
61. TÜİK (2013) “Eşdeğer Hanehalkı Kullanılabilir Gelire Göre Gini Katsayısı” http://www.tuik.gov.tr/ PreIstatistikTablo.do?istab_id=1601. (05.01.2013).
62. TÜİK HHBA (2003 - 2011). “Hanehalkı Bütçe Anketi Mikro Verileri”, TÜİK, Ankara.
63. Ziliak, J.P.ve Kniesner, T.J. (1999) “Estimating Life Cycle Labor Supply Tax Effects” Journal of Political Economy, 107(2), 326-359.