Wage Inequality and Returns to Education in Turkey: A Quantile Regression Analysis

Authors


  • This article is based on a chapter of Fatma Bircan's Ph.D. thesis (Bircan, 2005) prepared under the supervision of Aysit Tansel at the Department of Economics, Middle East Technical University. Fatma Bircan would like to thank Hakan Ercan, Burak Günalp, Yusuf Ziya Özcan, and Fikret Şenses for their helpful comments on her Ph.D. thesis. The authors would like to thank Ömer Demir, former president, Murat Karakaş, Özlem Sarıca and Sema Alıcı all of Turkish Statistical Institute for their help in providing and processing the data. This paper was presented at the ESPE conference, 22–24 June, 2006 in Verona, Italy. We thank participants of this conference, Tuncer Bulutay, Murat G. Kırdar, Semih Tümen and an anonymous referee for helpful comments.

Tansel: Department of Economics, Middle East Technical University, 06531 Ankara, Turkey. Tel: +90-312-210-2057; Fax: +90-312-210-7964; E-mail: atansel@metu.edu.tr. Bodur: Karaelmas University, 6700 Zonguldak, Turkey. E-mail: Bircanf@gmail.com.

Abstract

This paper investigates the male wage inequality and its evolution over the 1994–2002 period in Turkey by estimating Mincerian wage equations using ordinary least squares and quantile regression techniques. Male wage inequality is high in Turkey. While it declined at the lower end of the wage distribution it increased at the top end of wage distribution. Education contributed to higher wage inequality through both within and between dimensions. The within-groups inequality increased and between-groups inequality decreased over the study period. The latter factor may have dominated the former contributing to the observed decline in the male wage inequality over the 1994–2002. Further results are provided for the wage effects of experience, public sector employment, geographic location, firm size, industry of employment and their contribution to wage inequality. Recent increases in foreign direct investiment inflows, openness to trade and global technological developments are discussed as contributing factors to the recent rising within-groups wage inequality.

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