<abstract xmlns="http://www.w3.org/1999/xhtml"><p>We assess the effects of a sharp minimum wage increase on wages, informality, and employment in Turkey, a large developing economy with one of the highest minimum wage-to-average wage ratios among OECD countries and widespread discrepancies between labor market outcomes of women and of men. We look at the quasi-experimental 2016 minimum wage increase and pay attention to identifying information coming from demographic groups. We find that the increase in the minimum wage had an economically substantial and statistically significant positive impact on wages. Despite the positive wage effects of the increase, we find no negative employment effects. However, we show that the minimum wage increase may have caused an increase in the share of informal employment among workers with less than tertiary education, especially for such workers working for small firms.</p></abstract>

We assess the effects of a sharp minimum wage increase on wages, informality, and employment in Turkey, a large developing economy with one of the highest minimum wage-to-average wage ratios among OECD countries and widespread discrepancies between labor market outcomes of women and of men. We look at the quasi-experimental 2016 minimum wage increase and pay attention to identifying information coming from demographic groups. We find that the increase in the minimum wage had an economically substantial and statistically significant positive impact on wages. Despite the positive wage effects of the increase, we find no negative employment effects. However, we show that the minimum wage increase may have caused an increase in the share of informal employment among workers with less than tertiary education, especially for such workers working for small firms.

Heterogeneous effects of minimum wage on labor market outcomes: A case study from Turkey

IZA Journal of Labor Policy

This work is licensed under the Creative Commons Attribution 4.0 International License.

We assess the effects of a sharp minimum wage increase on wages, informality, and employment in Turkey, a large developing economy with one of the highest...

Heterogeneous effects of minimum wage on labor market outcomes: A case study from Turkey

Published Online: Nov 22, 2020

Page range: -

DOI: https://doi.org/10.2478/izajolp-2020-0016

Keywords
minimum wage, employment, informality, incremental difference-indifferences

© 2020 Enes Işık, Özgür Orhangazi, Hasan Tekgüç, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Heterogeneous effects of minimum wage on labor market outcomes: A case study from Turkey

Published Online: Nov 22, 2020

Page range: -

DOI: https://doi.org/10.2478/izajolp-2020-0016

Keywordsminimum wage, employment, informality, incremental difference-indifferences

© 2020 Enes Işık, Özgür Orhangazi, Hasan Tekgüç, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
minimum wage, employment, informality, incremental difference-indifferences