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Changes in the Turkish Wage Structure in the EU Accession Process
Abstract
This chapter aims to analyze the evolution of Turkish wage structure following the introduction of new labor law in 2003 in the EU accession process. The authors first present a descriptive picture of the changes in wage inequality between 2003 and 2013. They then conduct an econometric analysis of the relative importance of individual, job- and workplace-related factors on wages across the wage distribution to understand what drives this outcome. It is found that wage inequality decreased from 2003 to 2007, and increased during the global economic crisis. Increased returns to college education, skilled white collar jobs as well as returns to construction sector stand out as the major factors increasing wage inequality. Though to a lesser extent, increased returns to blue-collar jobs, formal job status and reduced returns to employment in large firms are factors reducing wage inequality in Turkey in the post-2003 era.
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