Seyfettin Gürsel, Gökçe Uysal and Melike Kökkızıl
This research brief aims to estimate the possible effects of a relatively high increase in minimum wages to wage distribution. The 2013 micro dataset of Household Labor Survey was used in the analysis. The earning data indicates that, by November of 2015, 57.3 percent of formal, full-time wage-earners working in private sector, i.e. more than half of the wage-earners in Turkey are receiving a monthly salary less than expected net minimum wage. When the regional disparities in the labor market are considered, the wage shock is expected to increase average wages moderately in certain regions (high-wage regions) and significantly in the others. When the minimum wage increases to 1300 TL, the regional median wages are expected to rise to 1300 TL, except in Istanbul and Ankara. In other words, we expect a considerable increase in the wages and this increase to have an effect on more than half of formal and full-time wage-earners working in private sector. No doubt that in Turkey, which has low rates of labor force participation, the minimum wage hike will encourage participation in the labor force. On the other hand, increases in labor costs following the minimum wage hike will also strengthen firms’ incentives to create informal employment.
doc. ResearchBrief189
pdf. ResearchBrief189