Labor Productivity and Real Unit Wage Index in Turkiye

Year 2021, Volume: 1 Issue: 2, 88 - 92, 31.01.2022

Hüseyin İkizler , Begüm Dikilitaş Çelik

Abstract

We provide the causality between real wage and productivity in the Turkish economy. The results are also provided at the sectoral levels. We employ a Granger causality analysis to observe the flow of causation. We find that labor productivity statistically causes real wage movements. This estimation is also valid for the manufacturing sector and the electricity, gas, steam, and air conditioning supply sectors. Besides, there exists a bi-directional relationship in the mining and quarrying sector.

Keywords

Labor productivity, real unit wage index, Granger causality, stationary

References

• Brida, J. G., Risso, W. A. and Sanchez Carrera, E. J. (2010). Real wages as determinant of labour productivity in the Mexican tourism sector. European Journal of Tourism Research, 3(1). https://ssrn.com/abstract=1308577
• Engle, R. F., and Granger, C. W. (1987). Cointegration and error correction: Representation, estimation, and testing. Econometrica, 55(2). https://doi.org/10.2307/1913236
• Granger, C. W. J. (1969). Investigating causal relation by econometric and cross-sectional method. Econometrica, 37(5). https://doi.org/10.2307/1912791
• Hein, E. and Tarassow. A. (2009). Distribution, aggregate demand and productivity growth: Theory and empirical results for six OECD countries based on a post-Kaleckian model. Cambridge Journal of Economics, 34(4).
• Karaalp-Orhan, H. (2017). Labour productivity, real wages and unemployment: An application of bounds test approach for Turkey. Journal of Economic and Social Development, 4(2). http://www.jesd-online.com/dokumenti/upload/separated/Vol%204%20No%202_Paper2.pdf
• Kumar, S., Webber, D. and Perry, G. (2012). Real wages, inflation and labour productivity in Australia. Applied Economics, 22(23). https://doi.org/10.1 080/00036846.2011.568405
• Madsen, J. and Damania, R. (2001). Labour demand and wage-induced innovations: Evidence from the OECD countries. International Review of Applied Economics, 15(3). https://doi.org/10.1080/02692170110052365
• Marquetti, A. (2004). Do rising real wages increase the rate of labor‐saving technical change? Some econometric evidence. Metroeconomica, 55(4). https://doi.org/10.1111/j.1467-999X.2004.00201
• Méndez, J. and Hernández, H. (2014). Relación de largo plazo y análisis de causalidad y sensibilidad entre los salarios reales y la productividad laboral en el sector manufacturero a partir de cifras de los departamentos en Colombia. Revista Finanzas y Política Económica, 6(2). http://www.scielo.org.co/pdf/fype/v6n2/v6n2a06.pdf
• Nayaran, P. and Smyth, R. (2009). The effect of inflation and real wages on productivity: New evidence from a panel of G7 countries. Applied Economics, 41(10). https://doi.org/10.1080/00036840701537810
• Pazarlıoğlu, V. and Çevik, E. İ. (2007), “Verimlilik, Ücretler ve İşsizlik Oranları Arasındaki İlişkinin Analizi: Türkiye Örneği”, Yönetim ve Ekonomi, 14(2). https://www.acarindex.com/dosyalar/makale/acarindex-1423939040.pdf
• Presidency of Strategy and Budget (2021). Unit Wage Index in Industry. Retrieved from: https://www.sbb.gov.tr/resmi-istatistik-programina-katkilarimiz/
• Pyo, H. (2018). Labor productivity and a test of Kaldor-Verdoorn law in East Asia. In D. K. Das (eds.). Productivity dynamics in emerging and industrialized countries. https://doi.org/10.4324/9781351002547-8
• Storm, S. and Naastepad, C. W. N. (2007). Why labour market regulation may pay off: Worker motivation, co-ordination and productivity growth. International Labour Organization, Economic and Labour Market Paper 2007/4. https://www.ilo.org/empelm/pubs/WCMS_113903/lang--en/in dex.htm
• Sylos-Labini, P. (1983). Factors affecting changes in productivity. Journal of Post Keynesian Economics, 6(2). https://www.jstor.org/stable/4537805
• Upender, M. and Sujan, M. (2008). Cointegration between labor productivity and wage rates: Empirical evidence from the Indian industries. The ICFAI Journal of Industrial Economics, 5(1).
• Valadkhani, A. (2003). An empirical analysis of Australian labour productivity. Australian Economic Papers, 42(3). http://dx.doi.org/10.1111/1467-8454.00199
• Veerger, R. and Kleinknecht, A. (2011). The impact of labor market deregulation on productivity: a panel data analysis of 19 OECD countries. Journal of Post Keynesian Economics, 33(2). https://www.tandfonline.com/doi/abs/10.2753/PKE0160-3477330208
• Vera, L. and Vera, J.(2021). Labor productivity and real wage: causal relationships in Venezuela. Problemas del Desarrollo, 52(205). https://doi.org/10.22201/iiec.20078951e.2021.205.69620
• Yıldırım, Z. (2015). Relationships among labour productivity, real wages and inflation in Turkey. Economic Research-Ekonomska Istraživanja, 28(1). https://doi.org/10.1080/1331677X.2015.1022401
• Yusof, S. (2008). The long-run and dynamic behaviors of wages, productivity and employment in Malaysia. Journal of Economic Studies, 35(3). https:// doi.org/10.1108/01443580810887805
• Wakeford, J. (2004). The productivity-wage relationship in South Africa: An empirical investigation. Development Southern Africa, 21(1). https://doi.org/10.1080/0376835042000181444
• Weisskopf, T., Bowles, S. and Gordon, D. (1983). Hearts and minds: A social model of U.S. productivity growth. Brooking Papers on Economic Activity, 14(2). https://doi.org/10.2307/2534294
• Wooldridge, J. M. (2015). Introductory econometrics: A modern approach. Cengage learning.