ERC WORKING PAPERS
Wage Inequality and Returns to Education in Turkey: A Quantile Regression Analaysis
Aysit Tansel and Fatma Bircan
This paper investigates the male wage inequality and its evolution over the 1994-
2002 period in Turkey by estimating Mincerian wage equations using OLS and quantile
regression techniques. Male wage inequality is high in Turkey. While it declined at the
lower end of the wage distribution it increased at the top end of wage distribution.
Education contributed to higher wage inequality through both within and between dimensions.
The within-groups inequality increased and between-groups inequality decreased over the
study period. The latter factor may have dominated the former contributing to the observed
decline in the male wage inequality over the 1994-2002. Further results are provided for the
wage effects of experience, public sector employment, geographic location, firm size, industry
of employment and their contribution to wage inequality. Recent increases in FDI inflows,
openness to trade and global technological developments are discussed as contributing factors
to the recent rising within-groups wage inequality.
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