Sectoral Employment and Labor Costs: Elasticity Evidence on Turkey

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Değer Ç.

Ege Stratejik Araştırmalar Dergisi, cilt.2, ss.19-33, 2011 (Hakemli Üniversite Dergisi)

  • Cilt numarası: 2 Konu: 2
  • Basım Tarihi: 2011
  • Doi Numarası: 10.18354/esam.81742
  • Dergi Adı: Ege Stratejik Araştırmalar Dergisi
  • Sayfa Sayıları: ss.19-33


A recurrent theme in employment policies is that reduction of labor costs would increase employment. This study aims to obtain a value for the employment elasticity of labor cost in Turkey through estimation of a sectoral employment equation. Using 3-digit ISIC Rev 3 industry data obtained from TURKSTAT, the present study performs a panel analysis. The calculated elasticities are positive,contradicting theoretical expectation., and pointing that cost reduction may not be a valid tool for employment expansion. It is also argued that the problem with the sign may be due to the data used and may actually be supportive of a wage curve