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

AN EVALUATION OF INFLATION EXPECTATIONS IN TURKEY

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

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

WHY DID PISA TEST SCORES RISE IN TURKEY?

Francisco L. Rivera-Batiz and Mine Durmaz

The Programme for International Student Assessment (PISA) studies the extent to which 15- year-old students have acquired key knowledge and skills in reading, mathematics, science and
problem solving. PISA test scores reflect not only what the students have learned but also how well they can apply that knowledge. The results of PISA for Turkey show a significant
improvement in average test scores over time. In Mathematics, Turkey’s average test score rose from 423 in 2003 to 448 in 2012, the highest increase for any country sampled in this period
except Brazil.

Because Turkey has had a period of sustained growth in per-capita income since 2002, the gains in tests scores in the country could simply be a reflection of a pure income effect: with higher
family income, students have greater home resources –computers, internet access, encyclopedias, etc.—which allow them to learn more. This study estimates that close to half of the gain in PISA math tests scores between 2003 and 2012 is plainly due to rising family socioeconomic background in the country. However, this also means that the remaining half is connected to other factors that influenced student achievement, including school-related reforms. The most important of these are: improvements in the quantity and quality of schools serving low-income families and those in less-populated areas, improved enrollment and achievement of girls, and rising teacher quality as reflected, for example, in growing teacher expectations in the classroom. At the same time, the study identifies some factors that acted to reduce tests scores between 2003 and 2012: greater student absenteeism (as identified by school principals), which suggests declining student motivation in schools, and rising overage, that is, the presence of older students in any given grade.

doc. ResearchBrief174

pdf. ResearchBrief174

ECONOMIC CONJUCTURE AND TREND IN INFORMAL EMPLOYMENT

Seyfettin Gürsel and Mine Durmaz

In the last and third research brief studying informal employment, we examine the evolution of informal employment over time. In previous two research briefs, we elaborated its structural determinants and its regional distribution, respectively. We already know that relatively larger shares of manufacturing and services in the employment, higher average education level of labor and higher average firm size are associated with lower level of informal employment. Besides, there is a fluctuating trend in the decrease in informality in recent years due to economic growth and employment growth. While high growth rate and high level of employment accelerate the decline in informality, low growth rate and low level of employment might cease the improvement in informality. Although the economic growth is quite low during the last years of the period under study, decreasing informality during these years might be attributed to large growth in employment in the same period. Nevertheless, in last six months decelerated employment growth accompanied by low GDP growth obscures the direction of changes in informality.

doc. ResearchBrief173

pdf. ResearchBrief173

LARGE REGIONAL DISPARITIES IN INFORMALITY

Seyfettin Gürsel and Mine Durmaz

Our second research brief studying the problem of informality focuses on regional disparities. There are large differences in regional rates of informal employment. According to 2013 data, while the country’s informality rate of 37 percent is soaring to 70 percent in Southeast region, it recorded about 16 percent in Ankara and Istanbul. The rate of informality for wage earners, which is reported as 20 percent overall, is more than 40 percent in Southeast region and ranges between 10 and 16 percent in highly industrialized western regions. In addition, significant decrease in overall informality at country level in the period 2005-2013 has been unequal through regions. While the overall informality rate decreased by 38 percent, it has been reduced by more than half in western regions. Correspondingly, decreases are more limited in other regions, but also in some regions informality increased.

The main force behind regional disparities in terms of informality is regional differences in structural determinants of informality such as average level of education, average firm size, or sectoral distribution of employment- that affect the level of informal employment. In last eight years, this unequal improvement in informality across regions arises from unequal regional changes in these structural determinants.

doc. ResearchBrief172

pdf. ResearchBrief172

Informal Employment Decreased in the Last Eight Years

Seyfettin Gürsel and Mine Durmaz

During the period of 2005-2013, informal employment declined significantly. Overall informality rate decreased from 48.2 percent to 36.8 percent and informality in non-agricultural sectors fell from 34.3 percent to 22.4 percent. The main force behind this improvement is the decline in informality among wage earners. However, the decrease of informality rate for self-employed workers is limited. Hence, the problem of informality in Turkish labor market requires studying these two categories of employment separately. The main reason for the decline in informality among wage earners is that newly created jobs in recent years are mostly formal jobs. Informal employment is substantially a consequence of social and structural features of labor force. In addition, the level of informal employment is affected by economic conjecture. According to seasonally adjusted monthly data over last eight years, overall informality rate followed a fluctuating trend. In next research brief, trend in the rate of informality over time will be discussed.

The main structural features studied in this research brief point out that the problem of wage earners’ informality is associated with the problem of small size of the firms. According to 2013 data, third-fourth of informal wage earners is employed in micro firms (0-9 workers). When informal employment in SMS’s (10-24 workers) is added to this share, it reaches 85 percent. Findings of this study reveal that policies aimed at reducing structural informality in the employment category of wage earners need to prioritize reducing out-of-labor costs, encouraging firms in size enlargement, and increasing frequency of inspection.

doc. ResearchBrief171

pdf. ResearchBrief171

TWO IN THREE CHILDREN LIVE IN SEVERE MATERIAL DEPRIVATION

Seyfettin Gürsel, Gökçe Uysal and Melike Kökkızıl

Executive Summary

According to the European Union standards, two out of every three children in Turkey live in severe material deprivation. In terms of severe material deprivation among children, Turkey falls behind Southern Europe countries as well as countries that are less developed such as  Hungary and Romania. Frequency of severe material deprivation falls to 50-55 percent in western regions in Turkey whereas it increases to 75 percent in its eastern regions. Such high shares make it difficult to pinpoint a high-priority target group for policy, hence, Betam has started using a narrower definition of basic material deprivation.  According to the definition used by Betam, 24.8 percent of children in Turkey live in basic material deprivation.  The share of children living in basic material deprivation falls substantially and rapidly from 2006 to 2010, however there is a small increase in 2011. Child poverty indicates dire circumstances for this as well as the upcoming generations and therefore, fight against to child poverty should move up the priority list among social policies.

doc. ResearchBrief164

pdf. ResearchBrief164

 

CULTURE, RELIGIOSITY AND FEMALE LABOR SUPPLY

Duygu Güner and Gökçe Uysal

Does culture a ffect female labor supply? In this paper, we address this question using a recent approach to measuring the eff ects of culture on economic outcomes, i.e. the epidemiological approach. We focus on migrants, who come from diff erent 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 aff ects 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 aff ects the current labor supply behavior. We also extend the epidemiological approach to analyze the eff ects of religion on female labor supply. More specifi cally, 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 signi ficant eff ects on female labor supply behavior.

pdf. WorkingPaper#013

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