Pay Inequality in Turkey in the Neo-strongLiberalstrong Era, 1980-2001.pdf

The European Journal of Comparative Economics Vol. 6, n. 2, pp. 177-206 ISSN 1722-4667 Pay Inequality in Turkey in the Neo-Liberal Era, 1980-2001 Adem Y. Elveren1 James K. Galbraith 2 Abstract This paper examines pay inequality in Turkish manufacturing annually from 1980 to 2001. Using the between-group component of Theil’s T statistic, we decompose the evolution of inequality by geographic region, province, sub-sector and by East-West distinction both for private and public sectors. The decompositions show that while inequality remains approximately the same between regions, it increases in the late 1980s in the private sector between provinces, between East and West, and as well as between manufacturing sub-sectors. JEL Classification: C32, D39, D63, J31 Keywords: Turkey, Inequality, Provinces, Sectors 1. Introduction This paper analyzes pay inequality in the manufacturing sector of Turkey between 1980 and 2001. By doing so, we attempt to sketch a general picture of Turkish income distribution, for the dispersion of manufacturing pay has been shown to be a broadly effective instrument for the movements of inequality writ large. The Turkish economy can be associated with a persistently unequal income distribution and a true dichotomy between the wealthier West and the poorer East. With the adoption of the neo-liberal model in 1980, inequality rose substantially, particularly in the 1990s. In international comparisons, indicators of inequality for Turkey are generally high when compared with other upper-middle income countr