Bulent Anil, Duygu Guner, Tuba Toru Delibasi and Gokce Uysal

Measuring the gender peer effects on student achievement has recently attracted a lot of attention in the literature. Yet, the results are inconclusive. A substantial amount of research shows that having relatively more girls in a division increases the academic achievement of all students. Nevertheless, the identification of pure gender effects remains a challenge due to the fact that girls outperform boys in overall academic performance. Our study overcomes this identification problem in a setting where girls are not academically better. Using 2009-2010 school year data on 8th graders in Turkey, this paper disentangles pure “academic” peer effects and “gender” peer effects. Our estimations reveal that the higher the share of females in a division, the lower the likelihood that a student drops out. One standard deviation increase in the share of females in the division decreases the likelihood of dropout by 0.3 percentage points. This result holds even though females are 9.32 percentage points more likely to drop out. These findings are robust to the inclusion of various control variables e.g. parental and academic background of the student, school and regional characteristics. We also find that the gender peer effects are prevalent in both females and males.

pdf. workingpaper018


Barış Soybilgen and Ege Yazgan

Expectations on the future state of the inflation play a critical part in the process of price level determination in the market. Therefore, central banks closely follow the developments in inflation expectations to able to pursue a successful monetary policy. In Turkey, the Central Bank of the Republic of Turkey (CBRT) asks experts and decision makers from financial and real sectors about their expectations/predictions on the current and the future state of inflation every month to obtain market expectations on inflation. This paper examines these predictions of inflation using techniques of forecasting literature. We analyze both point and sign accuracy of these predictions. Point predictions from CBRT surveys are compared with those obtained from AR models, and tested whether they are statistically different. Sign predictions are tested whether they are valuable to a user. We also test predictions for unbiasedness.

pdf. WorkingPaper#017


How does childhood poverty affect future outcomes of children?

Ayşenur Acar and Bülent Anıl

Hundreds of studies have focused on the measurement of poverty, developed poverty indices and made policy evaluations. However, truly understanding the nature of poverty and developing policies that aim to reduce poverty mostly depend on uncovering the intergenerational linkages of poverty. Using a cross section data obtained from SILC-2011 with a module on intergenerational transmission of disadvantages, we examine whether poverty is transmitted from parents to children. In addition, we analyze the effects of experiencing poverty during childhood on certain future outcomes of children that are closely related to poverty status in the adulthood (such as wage, age for starting work, informality, household size and health status) in Turkey. We find that children growing up in poor economic conditions are more likely to become income poor in the adulthood. This finding shows that there is low intergenerational mobility in income levels in Turkey. Those children start to work at their early ages and earn less, are living in large households. They are also more likely to involve in informal jobs or have a chronicle health problem in the adulthood.

pdf. WorkingPaper#016

Examination of the Transitions of Households into and out of Poverty in Turkey

Ayşenur Acar and Cem Başlevent


Using a balanced panel drawn from Turkstat’s Survey of Income and Living Conditions  (SILC), we aim to identify the main determinants of Turkish households’ entry into and exit from poverty. During the 4 year period (2007-2010) examined, the relative income poverty rate declined moderately, implying that households were more likely to exit than enter poverty. In addition to a descriptive analysis where poor, non-poor, entrant, and exitor households are compared in terms of basic household and household head characteristics, the empirical work involves the estimation of binary choice models that analyze the relative importance of these factors. Our models reveal that the employment status and schooling of the household head and household size are closely associated with poverty status changes. The probability of entry into poverty, for instance, is higher for larger households with many inactive/dependent members. However, model specifications that produce the best fit are the ones that take into account the changes in household composition and the amounts of income types received.

pdf. WorkingPaper#015

The Dynamics of Multidimensional Poverty in Turkey

Ayşenur Acar


Over the past 20 years, poverty has conceived as a multidimensional issue, not only one-dimensional issue based on conventional indicators (i.e., income or expenditure). While a relatively huge literature has focused on the dynamic analysis of one-dimensional poverty, little attention has been given to the dynamics of multidimensional poverty. Using a panel data drawn from the Survey of Income and Living Conditions (SILC) in the years 2007-2010, this study focuses on the dynamics of multidimensional poverty in Turkey. The purposes of the study are twofold: the first is to identify “poor” in Turkey by proposing a multidimensional poverty measure that incorporates various dimensions closely related to the well-being of individuals (such as labor market, housing, health and living standards), and the second is to investigate how the new measure differs from other existing poverty measures (i.e., income poverty and EU material deprivation) by using random effect probit model. The findings show that the new measure is partially consistent with the other measures and multidimensional poverty decreased during the period under examination. Empirical work reveals that higher years of schooling, homeownership or being a rental/asset income recipient decreases the probability of being multidimensionally poor, while large household size, attachment to agricultural employment or being a social welfare income recipient increases the probability of being multidimensionally poor.

pdf. WorkingPaper#014


Duygu Güner and Gökçe Uysal


Does culture affect female labor supply? In this paper, we address this question using a recent approach to measuring the effects of culture on economic outcomes, i.e. the epidemiological approach. We focus on migrants, who come from different cultures, but who share a common economic and institutional set-up today. Controlling for various individual characteristics including parental human capital as well as for current economic and institutional setup, we find that female employment rates in 1970 in a female migrant’s province of origin affects her labor supply behavior in 2008. We also show that it is the female employment rates and not male in the province of origin in 1970 that affects the current labor supply behavior. We also extend the epidemiological approach to analyze the effects of religion on female labor supply. More specifically, we use a proxy of parental religiosity, i.e. share of party votes in 1973 elections in Turkey to study female labor supply in 2008. Our findings indicate that female migrants from provinces that had larger (smaller) shares of the religious party votes in 1973 are less (more) likely to participate in the labor market in 2008. An extended model where both cultural and religiosity proxies are included shows that culture and religiosity have separately significant effects on female labor supply behavior.

pdf. WorkingPaper#013

Firm-Size Wage Gaps Along the Formal-Informal Divide: Theory and Evidence

Binnur Balkan (Central Bank of the Republic of Turkey), Semih Tumen (Central Bank of the Republic of Turkey)


Observationally equivalent workers are paid higher wages in larger fi rms. This fact is often named as the “firm-size wage gap” and is regarded as a key empirical puzzle. Using a nationally representative micro- level survey data from Turkey, this paper documents a new stylized fact: the firm-size wage gap is more pronounced for informal (unregistered) jobs than for formal (registered) jobs. To explain this fact, we develop a two-stage wage-posting game with market imperfections and segmented markets, the solution to which produces wages as a function of firm size in a well-de fined subgame-perfect equilibrium. The model proposes two distinct mechanisms. First, setting high tax rates on formal activity generates a wedge between formal and informal size wage gaps. Thus, government policy can potentially aff ect the magnitude of the firm-size wage gaps. We provide auxiliary empirical evidence justifying this finding. The model is able to explain the stylized fact through a second mechanism-even when the tax dimension is shut down. Higher wages off ered by a larger fi rm for a formal job can attract a larger number of applicants, than the same amount o ffered by the same firm can attract for an informal job. The larger pool of applicants for the formal job, in turn, enables the fi rm to keep the size diff erentials modest, while this mitigating e ffect is weaker for informal jobs.

pdf. WorkingPaper#012

The Effects of Debt Intolerance and Public Debt Sustainability on Credit Ratings: Evidence From European Economies

Assistant Professor Ata Özkaya- Galatasaray University


The question whether a government’s fiscal policy is consistent with an intertemporal budget constraint has been motivated a number of empirical studies. The econometric approach focuses on the circumstances under which a government is able to sustain its budget deficits without defaulting on its debt. In this contribution, by linking the different motives on long-run sustainability of public debt, we develop a compact step-wise test algorithm and apply that to the PIIGS countries and United Kingdom. Secondly, we introduce phase-space reconstruction methodology in order to locate the path for debt dynamics, which enables us to observe fiscal policy implications in short and medium-term. We conclude that Greece, Ireland, Portugal are characterized by unsustainable debt policies. For Italy, Spain and United Kingdom, we could not reach clear cut results. For those economies while the outcome of test algorithm indicates the sustainability of debt policy, phase-space examination shows that the reaction of the governments to diverging debt stock GDP ratio cannot be sufficient to stabilize the path for debt dynamics. Last, we measure relative credit ratings of 25 OECD countries, including Turkey and eurozone economies. Our measurement method is based on the fundamentals used for measuring public debt sustainability: GDP per capita, change in Consumer prices (CPI), and GDP ratios of; General government budget balance, General government primary balance, General government gross debt stock, Current account balance, Public foreign currency debt stock. For each country, these seven inter-related criteria are examined during three non-overlapping periods: 2005-2010, 2011 and 2012-2013. We conclude that the countries that have trouble with debt sustainability have overestimated sovereign credit ratings and hence they will eventually be revised.

pdf. WorkingPaper#011


Hüseyin Kaya


This paper investigates the predictive power of the yield spread on future industrial production growth and recession in Turkey. Employing the linear regression model we find that the yield spread has predictive power when forecasting industrial production growth. The results also suggest that in the inflation targeting monetary policy period, predictive power of the yield spread has increased. Furthermore, we investigate whether the yield spread predicts recession by employing a probit model. Since no official recessions are available in Turkey, we determine the recessions using the BBQ methodology. The findings suggest that the yield spread predicts the recessions about one year ahead.

pdf. WorkingPaper#010




Gülay Özcan and Magnus Rödin

Using a unique laboratory experiment where subjects are asked to guess the test performance of candidates presented by facial portraits and voice messages, this paper explores the following questions: Are beliefs about performance affected by if a candidate is perceived to have looks that are non-stereotypical for the dominant population and do these beliefs change if the candidate has native-like versus accented speech? The experiment is conducted in Sweden and the results show that candidates not perceived as stereotypically Swedish are considered to be worse performers. These beliefs are found in within-gender but not in cross-gender evaluations and are not eliminated when additional performance-related information about the candidates is provided. When candidates are presented by both looks and speech, differential evaluations based on looks disappear. Instead, we find strong negative beliefs about performance for candidates that speak Swedish with a foreign accent implying that ethnic stereotypes associated with speech override stereotypes associated with appearance. The negative beliefs associated with foreign-accented speech are not supported by corresponding mean differences in the candidates’ actual test performance.

pdf. WorkingPaper#009

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