Abstract
Over the last decade, alongside high unemployment rates, the number of discouraged workers remained high in Turkey despite high growth rates. Moreover, the ratio of men among discouraged workers is relatively high compared with other OECD countries, where discouragement is thought to be related to gender issues. Discouraged worker literature mainly investigates differences in the transition rates from unemployment and discouragement to employment. A few studies, however, explicitly explore who becomes discouraged and why, especially in developing countries. This article aims to address the factors affecting the transition to discouragement in Turkey using pooled cross-sectional data between 2006 and 2011, and considering individual and household characteristics, as well as various local labor market conditions. Our findings indicate that both low qualifications and poor market conditions are associated with higher levels of discouragement.
Abstract
Au cours de la dernière décennie, le nombre de travailleurs découragés est resté élevé en Turquie, tout comme le taux de chômage, en dépit d’un taux de croissance économique élevé. De plus, la part des hommes au sein de cette population de travailleurs découragés est relativement élevée par rapport à d’autres pays de l’OCDE, où le découragement est supposément lié aux disparités entre les sexes. Les travaux qui portent sur le phénomène du travailleur découragé examinent principalement le taux de transition du chômage et celui du découragement vers l’emploi. Cependant, quelques études analysent explicitement les caractéristiques des travailleurs découragés et les raisons de leur découragement, en particulier dans les pays en développement. Cet article se penche sur les facteurs qui influencent la transition vers le découragement en Turquie, à l’aide de données transversales groupées entre 2006 et 2011. Nous tenons compte des caractéristiques individuelles et des ménages, ainsi que des différentes conditions du marché du travail local. Nos résultats indiquent que le faible niveau de qualification et les mauvaises conditions du marché du travail sont tous deux associés à un taux élevé de découragement.
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Notes
There is a considerable body of work on the sufficiency of the unemployment rate as it is defined by ILO to measure the joblessness problem accurately. Among others, see OECD (1995), Murphy and Topel (1997), Juhn et al (2002), Jones and Ridell (2006), Brandolini et al (2006) and Bradbury (2006). Active population also underestimates joblessness in that it comprises underemployment related to involuntary part-time employment. The BLS, for instance, has developed alternative, extended measures of unemployment since 1994 (Bregger and Haugen, 1995).
Most studies are focused on developed countries. Byrne and Strobl (2004) is a notable exception and shows that in Trinidad and Tobago for some subpopulations unemployed and marginally attached workers can have the same transition probability of employment. This result implies that the seeking-work criterion is not always necessarily meaningful, especially in a developing country.
For instance, Finegan (1981) estimates the sensitivity of the number of discouraged workers in the United States to cyclical variations measured by a predicted unemployment rate using the Federal Reserve Board’s Index of Capacity Utilization in Manufacturing. Van Ham et al (2001) investigate discouragement in the Netherlands and capture the labor market dimension of the problem by a generic variable, namely, local underemployment. The underemployment definition includes all jobless persons willing to work, workers having a job of less than 12 hours a week, and workers holding a job the level of which is too low with respect to their educational level.
SILC data does not include information on discouraged workers. Given the large inter-regional disparities in terms of labor market characteristics, another important shortcoming of SILCs is the lack of detailed regional data. According to our calculations based on HLFSs, between 2006 and 2011, among the inactive population who declared that they were searching for a job 1 year ago (unemployed), 48 per cent left the labor force due to discouragement, and their transition probability to inactivity was 19.1, and 9.2 per cent to discouragement. In other words, on average nearly half of the transition from unemployment to inactivity was due to discouragement.
As previously pointed out, the lack of a clear distinction between active and passive searchers in developing countries also helps to explain why the nature of discouragement in the Turkish labor market is relatively less gender oriented.
In 2013 the total population of Turkey was 76.5 million and the median age was 30.1. According to the population projections of TurkStat, total population is expected to reach 84.2 million in 2023 and 93.5 million in 2050, while the median age will be 34.0 and 42.9, respectively.
Labor force participation rates in Turkey are quite low, especially for women (for a recent overview of the determinants of female participation in the labor market, see Ilkkaracan, 2012). Nevertheless, recently we observed a steady increase in participation rates. Between 2006 and 2011 overall labor force participation rate increased from 46.3 to 49.9 per cent, while it increased from 69.9 to 71.7 per cent for men and from 23.6 to 28.8 per cent for women.
For a recent study on regional development in Turkey, see Ersoy and Taylor (2012).
TurkStat follows the EU’s Nomenclature of Territorial Units (NUTS) for the classification of regions (see epp.eurostat.ec.europa.eu/portal/page/portal/nuts_nomenclature/introduction). The most detailed regional information on the labor markets is provided by HLFSs at the NUTS2 level with a breakdown into 26 provinces. The complete breakdown of regions at NUTS1 and less aggregate NUTS2 levels is given in Table 2. The eastern regions correspond to the northeastern, central eastern and southeastern Anatolia regions, which correspond to the last seven regions at the NUTS2 level.
In Turkey there exists no panel data set that allows us to compute the transition probabilities between the different labor market states, including discouraged and other marginally attached workers. However, HLFSs give information about individuals’ labor market status at the time of the survey and one year before. Accordingly, we have used this information in order to derive the backward transition probabilities.
For a discussion of discouraged workers in the basic job search framework, see Cahuc and Zylberberg, 2004, pp. 109–118.
Assume that the expected discounted utility of inactivity is stochastically distributed among the population according to a cumulative distribution function. In this case, the individuals for whom this discounted utility is just above the margin between inactivity and unemployment are the discouraged workers. The lower the gains associated with job search, the higher the number of discouraged.
The BLS defines marginally attached workers (including discouraged workers) as those who ‘ … wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not actively searched for work in the past 4 weeks’.
For a consistency check, we calculated the unemployment rate according to individual labor status reported for the previous year. We found that the calculated rate based on individual reporting exceeds the official rate by 1.7 point on average on a yearly basis for the period 2006–2011.
Results including population without past work experience are not reported here, but are available upon request.
In addition, the sample excludes the population over 65 years of age, and those for whom past employment and/or occupational status is missing.
Finegan (1981) points out some important shortcomings of using the unemployment rate as an index of labor market conditions while estimating the discouraged worker effect. For instance, exogenous shifts of individuals between unemployment and discouragement, or a misclassification of persons between these two categories, may imply a negative relationship between these two labor states. Yet, one would expect a positive cyclical relationship. Use of the broad unemployment rate enables us to avoid such problems as it takes into account both unemployed and discouraged workers.
Istanbul accounts for 12 per cent of the unemployed in our sample, against only 2 per cent of discouraged workers (Table 3 summary statistics).
In conformity to TurkStat, we define informal employment as individuals who are not registered with any social security institution.
Di Addario (2011) provides a comprehensive summary of various possible impacts; see Table A1, p. 316, ‘Agglomeration effects on labor market dynamics’.
The length of inactivity in years can be captured from the specific question on the date of latest job of the individual.
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Acknowledgements
We are grateful to Seyfettin Gürsel, Franck Malherbet, Murat Güray Kırdar, İnsan Tunalı, Halis Murat Yıldız, two anonymous referees and to the participants of ‘Turkey labour market research network conference’ organized by BETAM Bahçeşehir University and The World Bank, and to the participants of ITU Haydar Kazgan seminar series for helpful comments and suggestions. The usual disclaimer applies.
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Gürbüz, A., Polat, S. & Ulus, M. In Limbo: Exploring Transition to Discouragement. Eur J Dev Res 26, 527–551 (2014). https://doi.org/10.1057/ejdr.2014.28
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DOI: https://doi.org/10.1057/ejdr.2014.28