The Impact of the 2008 Crisis on Top Labor Incomes in Turkey: A Nonparametric Analysis

Tümen S.

ECONOMICS BULLETIN, vol.33, no.2, pp.1269-1282, 2013 (ESCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 33 Issue: 2
  • Publication Date: 2013
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus
  • Page Numbers: pp.1269-1282
  • TED University Affiliated: No


This paper presents a nonparametric analysis of the impact of the 2008 crisis on earnings distribution in Turkey. Using micro-level data from the Household Labor Force Survey (2004-2011), 1 show that the crisis has operated most visibly above the upper quartile of the earnings distribution. I present three main findings: (1) the share of the top decile -- especially the top percentile -- has increased significantly right after the crisis. (2) the top quartile (i.e., the right tail) of labor incomes in Turkey resembles, on average, a Pareto distribution with a corresponding Gini coefficient of around 0.23. and (3) following the crisis, the earnings differentials have widened above the top quartile and wildly deviated from the Pareto form, I document that the changes observed right after the crisis have mostly been temporary, that is, a normalization process has operated in the aftermath of the crisis. I argue that the health of the domestic banging system might be an important determinant of the effect of large scale financial crises on top labor incomes. A sound banging system can generate income polarization in a country, when global crises lead to asymmetric income reallocations across sectors.