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Good Jobs in Turkey

Good Jobs in Turkey. World Bank and Ministry of Development Consultation of the Draft September 2013. The report is a part of on-going joint work on labor markets in Turkey. Key messages.

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Good Jobs in Turkey

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  1. Good Jobs in Turkey World Bank and Ministry of Development Consultation of the Draft September 2013

  2. The report is a part of on-going joint work on labor markets in Turkey

  3. Key messages • The post-crisis period of strong economic growth led to significant employment growth; many of the newly created jobs have been of good quality • Employment growth mainly took place in the services and formal sectors; majority of net employment generation affected both men and women • However, many middle aged and older females have re-entered informal agricultural sector • Labor reallocation in Turkey appears to be growth-enhancing • Movement from agriculture to non-agriculture has contributed to overall productivity • Movements of labor within non-agricultural sector have been generally growth-enhancing • There is suggestive evidence of labor reallocation in agriculture towards more productive regions • Labor income was the biggest contributor to total household income and growth in labor income contributed to higher living standards among low-income households. • Policies supporting the promising developments include, • for individuals (i) expansion of childcare provision, especially in urban centers; (ii) expansion of services for the elderly, (iii) improved opportunities of skill upgrading and (iv) activation of social benefits, and • for firms (v) combating informality as for example with the related Action Plan, and (vi) the expansion of flexible contracting and reform of severance pay, as discussed in the 10th Development Plan. 3

  4. What are “good jobs”? Where do they come from? Conceptual Framework

  5. Jobs have direct and indirect benefits

  6. The role of structural change in Turkey Job Creation and Productivity

  7. Agricultural shedding in Turkey has been growth-enhancing • Turkey – all sectors Turkey – non-agriculture

  8. The link between job creation and productivity in the non-agricultural sector Job Creation and Productivity

  9. Methodology for assessing linkage between productivity and job creation • Cross-section regressions • Given the short-run tradeoff between productivity and job creation, the longer-term relationship is assessed on firms that survived for 6 years (2005-2010) • These firms are different from other firms (e.g. they have higher initial productivity), so adjustment for sample selection is made using multinomial logit regression • First stage: DV=P(survival) based on initial productivity, exporter status, and regional dummies (exclusion restriction) • Second stage: DV=net job creation rate over 2005-2010 • Panel regressions • Assessment of how within-firm productivity changes affect job creation • Decompositions (manufacturing sector) • Confirmation of panel regression results and benchmarking contributions to productivity growth from different sources

  10. Productive firms appear to be creating the most jobs, and within-subsector reallocation of labor appears to be the most productivity-enhancing in Turkey • Three sources of labor reallocation are defined: • Within sub-sector • Across sub-sector • Across sector Contribution to labor movements Coefficients with different sector fixed effects

  11. Labor reallocation towards more productive activities happens both within services and within manufacturing but comes from different sources • For services, productive reallocation of labor occurs only within subsectors • In manufacturing, movement across subsectors accounts for significant (LP) or all (TFP) productive reallocation

  12. Productivity growth in manufacturing originated both from the productivity growth of existing firms (“within effect”) and the reallocation of labor from low- to high-productivity firms (“between effect”) • Turkey has the highest contribution of between-firm effect, implying substantial creative destruction in the manufacturing sector • Exit of firms has not contributed to productivity growth

  13. List of Contributors • Executive SummaryRebekkaGrun and SinemCapar • Chapter 1 RebekkaGrun • Chapter 2 MeltemAran and NazliAktakke • Chapter 3 Victoria Levin, TolgaCebeci, LeventYener, and Altan Aldan • Chapter 4 CarolaGruen, Bulent Anil, and AysenurAcar

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