Labor income share consequences of global financial crisis: Evidence from Turkey

Purpose: The aim of this study is to examine the effects of the 2008 financial crisis on the labor share in Turkey, by conducting a comparative analysis of various labor share measures using both micro survey and aggregate data. Design/Methodology/Approach: By adopting aggregate data- based labor share measures to micro survey data, four different labor share measures in the total market income were calculated using micro data from the 2006 to 2014 Income and Living Conditions Survey of Turkey. Two additional labor share measures were calculated using aggregated data obtained from World Input Output Database's Socio Economics Accounts. Findings: The results of the micro-data calculations indicated a substantial and permanent increase during the crisis due to the labor hoarding in the labor market leading to an increase in skilled employee labor income share at the expense of unskilled employee labor income share. The results obtained from aggregate data-based labor share calculations with two different measures were relatively smaller than micro data-based labor shares due to the large share of informal employment in Turkey. Further, the labor shares obtained from aggregate data decreased during the 2008 financial crisis, in contrast to the labor shares from micro data. Research limitations/implications - Due to the lack of the applicable aggregated data, four labor share measures adopted to micro data could not be used for aggregated data-based labor share calculations. Therefore, a straightforward comparison between the micro and macro data based results of the labor share measures could not be made. Originality/Value: As the first attempt using micro survey data for calculation of Turkey's factor shares, this study reveals the labor market consequences of global financial crisis in Turkey in search of the evolution of labor share in the market income and provide a comparison between micro and macro data-based results.