The role of unemployment in wage determination: Three essays on the wage curve (Turkey).

摘要

This dissertation entails three essays on the wage-unemployment relationship, more specifically the role of regional unemployment rates in wage determination. The analysis builds upon a series of recent empirical studies on the wage-unemployment relationship, now commonly known as “the wage curve,” a downward sloping curve in wage-unemployment space.; Essay 1 presents an empirical estimation of the correlation between wages and regional unemployment rates in Turkey. The paper is one of the few attempts at a wage curve analysis within the context of a developing market economy. A cross-sectional estimation of micro level individual wage data for the Turkish labor market in 1994, suggest a statistically significant negative correlation between wages and regional unemployment rates. Separate regressions for men and women, however, show a wage curve to exist only in the male labor market. The study also presents the results on other variables of wage determination such as returns to schooling, returns to age, gender, industrial and occupational affiliation, economic sector and union status.; Essay 2 presents a model and some empirical findings on non-linear functional forms of the wage curve. The model, which builds upon complementary elements of the classical and imperfect competition models of the labor market, suggests a downward sloping S-shaped curve in wage-unemployment space. The rate of unemployment is argued to be a negatively correlated determinant of wages, but bound within the upper and lower limits to the wage rate, which themselves are determined by the rate of profit and a subsistence level wage respectively. Using cross-sectional labor market data from the U.S. for the year 1998, I test for non-linear specifications of the wage curve and compare their analytical strength to the mainstream models.; Essay 3 entails a comparative analysis of static versus dynamic forms of the wage-unemployment relationship which are inspired by the mainstream wage curve studies and the heterodox Goodwin-type growth cycle models respectively. Using pooled time-series, cross-section labor market data from the U.S. for 1989–1998. I find both static and dynamic functional forms to perform well, but the former to be more robust. The results are evaluated in comparison to empirical findings of earlier studies.