| Abstract: |
The decrease in the share of agricultural employment in Turkey has been
reversed recently, especially during the global crisis. Agricultural
employment increased by 17 percent between 2007 and 2010 and its share in
total employment increased by 1.7 percentage points above its 2007 level. This
paper studies the causes of the increase in agricultural employment. Is the
surge in agricultural employment stemming from a decrease in the
non-agricultural employment opportunities and the decrease in non-agricultural
wages during the crisis? Or, have increasing food prices around the world
caused an increase in agricultural income, making the agricultural sector more
attractive for employment? We use a two-sector small-open economy model to
analyze the effect of changes in world agricultural prices on sectoral
employment. In order to quantify the implications of our model we exploit the
regional variation in agricultural employment across 26 regions in Turkey. We
use panel data covering agricultural prices and production, non-agricultural
wages, employment and regional inflation between 2004 and 2010. We find that
agricultural prices play an important role in explaining the observed
variation in agricultural employment in Turkey. We fail to find evidence on
the effect of non-agricultural wages on agricultural employment. |