Abstract
This paper proposes an estimate of wage discrimination in Turkey relying on a decomposition of the selectivity corrected gender wage differential using 2003 data. In Turkey, the observed average wage gap in terms of the female wage is 38%, of which 63% can be attributed to discrimination. A comparison with results obtained from European countries, using the same methodology, reveals that even though the raw wage gap in Turkey is surprisingly narrow, close to that observed in France and Italy, the discrimination component is high, comparable to that of Spain and Greece.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
The 2006 Commission's report notes, regarding equal opportunities, that alignment is required to the Community acquis, particularly concerning parental leave, equal pay, equal access to employment and statutory and occupational social security.
The gender wage gaps vary over a wide range with Slovenia ranking as the most egalitarian with a wage ratio of 86.6% and Japan ranking the worst with 42.7%.
In 2003, the labor force participation in the OECD countries was 69%, and 71 in the EU-15 with the lowest rates in Italy (62.3%).
Most countries have employment rates in excess of 50%. The exceptions are largely in the Middle East. Notice that Turkey's unemployment is likely to be underestimated as workers have few incentives to report themselves as unemployed. The unemployment insurance system was legally established in 1999 but the first benefit payments were made in the beginning of 2002 only. Moreover, the coverage of the plan is currently very low. According to the World Bank (2006), less than 4% of unemployed workers receive benefits.
In Turkey, it is illegal for an employer to employ workers without social security coverage (see Tansel, 2000).
The Western region of the country, where Istanbul is located.
In 2003, the legal working time in Turkey was 45 hours a week. Conforming to the OECD definition, we consider full-time as being a wage earner working 30 hours a week or more, and part-time as a wage earner working between 10 and 29 hours.
Wages are the sum of cash earnings, bonuses and the value of income in-kind. Fringe benefits are not included in the wage earners reported earnings. They are given in New Turkish Liras (NTL); 1 New Turkish Lira=1.000.000 Turkish Liras. In 2003, the IMF-based rate USD/TL was 1.50088520858333. Hourly wages are not observed directly, but obtained by dividing current monthly total gross earnings by the current total number of hours worked per week multiplied by 4.35.
Labor Law Article 26 stipulates that male and female workers performing jobs of the same nature and working with equal efficiency will receive the same wages.
Even if the unexplained part is usually attributed to discrimination, it is important to recognize that it also captures all potential effects of differences in unobserved variables as argued by B. Jann (2008).
As discussed by B. Jann (2008), an issue with the approach by Neumark (1988) or Oaxaca and Ransom (1994) is that it may inappropriately transfer some of the unexplained part of the differential into the explained component and thus distort the decomposition results due to residual group difference spilling over into the slope parameters of the pooled model. To avoid such a distortion, following B. Jann (2008), we have included a gender indicator in the pooled model as an additional covariate.
Other types of treatments have been considered, see. Beblo et al. (2003a).
Neuman and Oaxaca (1998) discuss the question of the affectation of the selectivity term to the explained and unexplained components. We have chosen here to treat selectivity as a separate component as it requires no a priori assumptions about whether selectivity has more influence on individual characteristics or on the returns of these characteristics.
In most studies, the last term on the right-hand side in equation (4) is subtracted from the observed wage gap on the left-hand side. In this form, the left-hand side provides a measure of the difference in potential or offered wages, in contrast to observed wages realized for those participating in the labor market. Empirical studies largely support the significance of the selection bias correction, particularly for women.
17.2% of the men of working age are self-employed compared to 2.4% of the women.
The Chow tests for structural stability confirmed that the parameters in the male equation are significantly different from those in the female equation.
Definitions of the variables used are given in Appendix A.
It is also the case in almost all European countries.
The different measures of segregation computed on our sample and reported in Appendix B show a very high level of segregation against women.
Again, however, this interpretation hinges on the assumption that there are no relevant unobserved predictors.
Jones (1983) demonstrated, that other than for the explained part of the decomposition, the contributions to the unexplained part may depend on arbitrary scaling decisions if the predictors do not have natural zero points.
By doing so, the risk is to increase selection biases.
Denmark is an exception.
The region has a multi-ethnic character. Besides Kurds and Turks, which are the largest ethnic groups, the region also includes Zaza, Azerbaijanis, Arabs, Christians who speak the Syriac language and others.
References
Anker, R . 1997: Theories of occupational segregation by sex: An overview. International Labor Review 136 (3): 1–25.
Beblo, M, Beninger, D, Heinze, A and Laisney, F . 2003a: Methodological issues related to the analysis of gender gaps in employment, earnings and career progression. Final Report, European Commission, Employment and Social Affairs DG.
Beblo, M, Beninger, D, Heinze, A and Laisney, F . 2003b: Measuring selectivity-corrected gender wage gaps in the EU. ZEW Discussion paper no. 03-74.
Blau, FD and Kahn, LM . 2003: Understanding international differences in the gender pay gap. Journal of Labor Economics 21 (1): 106–144.
Blinder, AS . 1973: Wage discrimination: Reduced form and structural estimates. The Journal of Human Resources 8 (4): 436–455.
Dayioglu, M and Kasnakoglu, Z . 1997: Women's labor force participation and earnings differentials between genders in Turkey. METU Studies 24 (3): 329–361.
Dayioglu, M and Tunali, I . 2004: Falling behind while catching up: Changes in the female-male differential in Urban Turkey 1988 to 1994 EALE/SOLE 2005, unpublished paper.
European Commission. 2003: Gender pay gaps in European labour markets – Measurement, analysis and policy implications. Commission Staff Working paper, SEC(2003) 937, Brussels, 4 September.
European Commission. 2004: Employment in Europe 2004: Recent trends and prospects. Office for Official Publications of the European Communities: Luxemburg.
European Commission. 2005: European employment observatory review Autumn 2004, Office for Official Publications of the European Communities: Luxemburg.
Heckman, J . 1979: Sample selection bias as a specification error. Econometrica 47 (1): 153–161.
Ilkkaracan, P and Women for Women's Human Rights. 1999: Exploring the context of women's sexuality in Eastern Turkey. Dossier 22, Women living under Muslim laws.
Ilkkaracan, I and Selim, R . 2007: The gender wage gap in the Turkish labor market. Labour 21 (3): 563–593.
Jann, B . 2008: A Stata implementation of the Blinder-Oaxaca decomposition. ETH Zurich Sociology Working papers no. 5, ETH Zurich.
Jones, FL . 1983: On decomposing the wage gap: A critical comment on blinder's method. The Journal of Human Resources 18 (1): 126–130.
Lam, D and Schoeni, RF . 1993: Effects of family background on earnings and returns to schooling: Evidence from Brazil. Journal of Political Economy 101 (4): 710–740.
Meghir, C and Whitehouse, E . 1996: The evaluation of wages in the United-Kingdom: Evidence from micro data. Journal of Labour Economics 14 (1): 1–25.
Meurs, D and Ponthieux, S . 2004: Les écarts de salaires entre les hommes et les femmes en Europe, effets de structure ou discrimination? Revue de l’OFCE 90: 153–192.
Mincer, J . 1958: Investments in human capital and personal income distribution. Journal of Political Economy 56 (4): 281–302.
Mincer, J . 1974: Schooling, experience and earnings. Columbia University Press: New York.
Neuman, S and Oaxaca, RL . 1998: Estimating labour market discrimination with selectivity corrected wage equations: Methodological considerations and an illustration from Israel. CEPR Discussion Paper Series no. 1915.
Neumark, D . 1988: Employers’ discriminatory behavior and the estimation of wage discrimination. Journal of Human Resources 23 (3): 279–295.
Oaxaca, RL . 1973: Male-female wage differentials in urban labor markets. International Economic Review 14 (3): 693–709.
Oaxaca, RL and Ransom, MR . 1994: On discrimination and the decomposition of wage differentials. Journal of Econometrics 61 (1): 5–21.
OECD. 2005: Employment outlook. OECD: Paris.
Rashid, M, Rutkowski, J and Fretwell, D . 2005: Labor markets. In: Barr, N (ed). Labor Markets and Social Policy in Central and Eastern Europe. The World Bank: Washington, DC pp. 59–87.
Suits, DB . 1984: Dummy variables: Mechanics v. interpretation. The Review of Economics and Statistics 66: 177–180.
Tansel, A . 2000: Wage earners, self-employment and gender in the informal sector in Turkey. Policy Research Report on Gender and Development, Working Paper Series no. 24.
Tansel, A . 2005: Public-private employment choice, wage differential and gender in Turkey. Economic Development and Cultural Change 53 (2): 453–477.
Vella, F . 1994: Gender roles and human capital investment: The relationship between traditional attitudes and female labour market performance. Economica 61: 191–211.
Wolf, E . 2002: Lower wage rates for fewer hours? A simultaneous wage-hours model for Germany. Labour Economics 9: 643–663.
World Bank. 2006: Turkey labor market study. World Bank: Washington, DC.
Yun, M-S . 2005: A simple solution to the identification problem in detailed wage decompositions. Economic Inquiry 43: 766–772.
Acknowledgements
An earlier version of this paper was presented at the Journées de Microéconomie Appliquée JMA on May 2007 in Fribourg and the Ecineq Conference on July 2007 in Berlin. We benefited from helpful comments of the participants of these meetings. We are grateful to J.-P. Laffargue and C. Sofer for their comments and to the anonymous referee of the Comparative Economic Studies for his/her helpful comments and suggestions. Any errors, however, remain our own.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Cudeville, E., Gurbuzer, L. Gender Wage Discrimination in the Turkish Labor Market: Can Turkey Be Part of Europe?. Comp Econ Stud 52, 429–463 (2010). https://doi.org/10.1057/ces.2010.2
Published:
Issue Date:
DOI: https://doi.org/10.1057/ces.2010.2