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The Effects of Social Security Taxes and Minimum Wages on Employment: Evidence from Turkey

Kerry Papps ()

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

Abstract: sing worker-level panel data for Turkey, this paper analyses the separate employment effects of increases in the social security taxes paid by employers and increases in the minimum wage between 2002 and 2005. Variation over time and among low-wage workers in the ratio of total labour costs to the gross wage gives rise to a natural experiment. Regression estimates indicate that a given increase in social security taxes has a larger negative effect on the probability of a worker remaining employed in the next quarter than an equal-sized increase in the minimum wage. Those who retain their jobs in the next quarter also experience a larger reduction in working hours when social security taxes increase than when the minimum wage rises. This is consistent with a situation in which workers increase effort in response to an increase in wages. Men, rural-dwellers and those under 30 are found to have the strongest overall disemployment effects in response to increases in labour costs.

Pages: 28 pages
Date: 2010-05
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-lab and nep-pub
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http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1017.pdf (application/pdf)

Related works:
Journal Article: The Effects of Social Security Taxes and Minimum Wages on Employment: Evidence from Turkey (2012) Downloads
Working Paper: The Effects of Social Security Taxes and Minimum Wages on Employment: Evidence from Turkey (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:koc:wpaper:1017

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