nep-ara New Economics Papers
on Arab World
Issue of 2012‒11‒17
twelve papers chosen by
Quentin Wodon
World Bank

  1. Gender Effects of Education on Economic Development in Turkey By Aysit Tansel; Nil Demet Gungor
  2. The Formal/Informal Employment Earnings Gap: Evidence From Turkey By Aysit Tansel; Elif Oznur Kan
  3. Labor Mobility Across The Formal/Informal Divide in Turkey: Evidence From Individual Level Data By Aysit Tansel; Elif Oznur Kan
  4. Turkish Voter Response to Government Incompetence and Corruption Related to the 1999 Earthquakes By Ali T. Akarca; Aysit Tansel
  5. An Empirical Analysis of the Bank Lending Channel in Turkey By Ekin Ayse Ozsuca; Elif Akbostanci
  6. International trade, female labor, and entrepreneurship in MENA countries By Silvio Contessi; Francesca de Nicola; Li Li
  7. Interest Rate Pass-Through to Turkish Lending Rates: A Threshold Cointegration Analysis By Dilem Yildirim
  8. Comparative Economic Systems: A Brief Review By Shaikh, Salman
  9. Interest Based Financial Intermediation: Analysis and Solutions By Shaikh, Salman
  10. Working Paper 158 - Tackling Graduate Unemployment through Employment Subsidies an Assessment of the SIVP Programme in Tunisia By Broecke, Stijn
  11. Career barriers for women executives and the Glass Ceiling Syndrome: the case study comparison between French and Turkish women executives. By Cansu Akpinar
  12. Determinants of Mobile Telecommunication Adoption in the Kurdistan Region of Iraq By Nabaz T. Khayyat; Almas Heshmati

  1. By: Aysit Tansel (Department of Economics, METU); Nil Demet Gungor (Department of Economics, Atilim University)
    Abstract: Several recent empirical studies have examined the gender effects of education on economic growth or on steady-state level of output using the much exploited, familiar cross-country data in order to determine their quantitative importance and the direction of correlation. This paper undertakes a similar study of the gender effects of education using province level data for Turkey. The main findings indicate that female education positively and significantly affects the steady-state level of labor productivity, while the effect of male education is in general either positive or insignificant. Separate examination of the effect of educational gender gap was negative on output. The results are found to be robust to a number of sensitivity analyses, such as elimination of outlier observations, controls for simultaneity and measurement errors, controls for omitted variables by including regional dummy variables, steady-state versus growth equations and considering different samples.
    Keywords: Labor Productivity, Economic Development, Education, Gender, Turkey
    JEL: O11 O15 I21 J16
    Date: 2012–04
  2. By: Aysit Tansel (Department of Economics, METU); Elif Oznur Kan (Department of International Trade, Cankaya University)
    Abstract: In this study, we examine the formal/informal sector earnings differentials in the Turkish labor market using detailed econometric methodologies and a novel panel data set drawn from the 2006-2009 Income and Living Conditions Survey (SILC). In particular, we test if there is evidence of traditional segmented labor markets theory which postulates that informal workers are typically subject to lower remuneration than similar workers in the formal sector. Estimation of standard Mincer earnings equations at the mean using OLS on a pooled sample of workers confirms the existence of an informal penalty, but also shows that almost half of this penalty can be explained by observable variables. Along wage/self-employment divide, our results are in line with the traditional theory that formal-salaried workers are paid significantly higher than their informal counterparts. Confirming the heterogeneity within informal employment, we find that self-employed are often subject to lower remuneration compared to those who are salaried. Moreover, using quantile regression estimations, we show that pay differentials are not uniform along the earnings distribution. More specifically, we find that informal penalty decreases with the earnings level, implying a heterogeneous informal sector with upper-tier jobs carrying a significant premium and lower-tier jobs being largely penalized. Finally, fixed effects estimation of the earnings gap depict that unobserved individual fixed effects when combined with controls for observable individual and employment characteristics explain the pay differentials between formal and informal employment entirely, thereby implying that formal/informal segmentation may not be a stylized fact of the Turkish labor market as previously thought.
    Keywords: Earnings gap, formal/informal employment, labor market dynamics, panel data, Turkey
    JEL: J21 J31 J40
    Date: 2012–04
  3. By: Aysit Tansel (Department of Economics, METU); Elif Oznur Kan (Department of International Trade, Cankaya University)
    Abstract: Informality has long been a salient phenomenon in developing country labor markets, thus has been addressed in several theoretical and empirical research. Turkey, given its economic and demographic dynamics, provides rich evidence for a growing, heterogeneous and multifaceted informal labor market. However, the existing evidence on labor informality in Turkey is mixed and scant. Along these lines, we aim to extend the existing literature by providing a diagnosis of dynamic worker flows across distinct labor market states and identifying the effects of certain individual and job characteristics on variant mobility patterns. More specifically, we first develop and discuss a set of probability statistics based on annual worker transitions across distinct employment states utilizing Markov transition processes. As Bosch and Maloney (2007:3) argue: “labor status mobility can be assumed as a process in which changes in the states occur randomly through time, and probabilities of moves between particular states are governed by Markov transition matrices”. Towards this end, we will use the novel Income and Living Conditions Survey (SILC) panel data set to compute the transition probabilities of individuals moving across the labor market states of formal-salaried, informal-salaried, formal self-employed, informal self-employed, unemployed and inactive. The transitions analysis is conducted separately for two, three and four year panels pertaining to 2006 to 2007, 2006 to 2008 and 2006 to 2009 transitions; for total, male and female samples; and lastly for total and non-agricultural samples. In this way, we aim to contribute to the limited body of stylized facts available on mobility and informality in the Turkish labor market. Next, we conduct multinomial logit regressions individually for each set of panel to identify the impact of individual characteristics (i.e. gender, age, education level, work experience, sector of economic activity, firm size, number of other household members, having/not having children, rural/urban) underlying worker transitions. The results reveal several relationships between the covariates and likelihood of variant transitions, and are of remarkable importance for designing policy to address labor informality and reduce its negative externalities.
    Keywords: Labor market dynamics, informality, Markov processes, multinomial logit, Turkey
    JEL: J21 J24 J40 J63 O17
    Date: 2012–01
  4. By: Ali T. Akarca (Department of Economics, University of Illinois at Chicago); Aysit Tansel (Department of Economics, METU)
    Abstract: The two major earthquakes which struck northwestern Turkey in 1999,caused enormous amounts of death and destruction, and exposed rampant government corruption involving construction and zoning code violations, as a factor magnifying the disaster. The opposition parties and one of the incumbent parties which participated in previous national governments and held power in current and past municipal administrations were responsible for that. The other two incumbent parties came to power only a short time before the earthquakes and controlled almost none of the local administrations in the disaster zone. They on the other hand, were responsible for the incompetence shown in providing relief, for involvement in corruption related to those efforts, and for failing to prosecute the businessmen who constructed the shoddy buildings and the corrupt officials who permitted them.How voters responded to these in the 2002 parliamentary elections is investigated, using crossprovincial data, controlling for other social, political and economic factors. The fact that different groups of parties were responsible for different types of corruption and mismanagement provided us with a unique data to differentiate between voter responses to corruption and incompetence, and to corruption which has occurred before and after the earthquakes. Our results show that voters punished all of the political parties which participated in governments during the previous decade. The party in charge of the ministry responsible for disaster relief, and parties that controlled more of the city administrations in the quake zone were blamed more. The newly formed Justice and Development Party (AKP) was the main beneficiary of the votes lost by these parties. Our results corroborate the view in the corruption literature that voters react drastically only when the corruption is massive, the information on it highly-credible and well-publicized, involves large number of political parties, not accompanied by competent governance, and a non-corrupt alternative is available.
    Keywords: Turkey, Natural disaster, Earthquake, Corruption, Government performance, Elections, Voter Behavior, Party preference
    JEL: D72 D73
    Date: 2012–01
  5. By: Ekin Ayse Ozsuca (Department of Economics, Cankaya University); Elif Akbostanci (Department of Economics, METU)
    Abstract: This paper studies the role of banking sector in monetary policy transmission in Turkey covering the period 1988-2009. Specifically, we investigate the impact of monetary policy changes on banks’ lending behavior. Given the changes in the policy stance and developments in the financial system following the implementation of structural reforms in the aftermath of the 2000-01 crisis, the analysis is further conducted for the two sub-periods: 1988-2001 and 2002-2009, to examine whether there is a change in the functioning of the credit channel. Based on bank-level data, empirical evidence suggests cross sectional heterogeneity in banks’ response to monetary policy changes during 1988-2009. Regarding the results of the pre-crisis and post-crisis periods, we find that an operative bank lending channel existed in 1988-2001, however its impact became much stronger thereafter. Furthermore, there are significant differences in the distributional effects due to bank specific characteristics in the impact of monetary policy on credit supply between the two sub-periods. While the results indicate an operative bank lending channel due to earnings capability and asset quality in the first period, size, liquidity, capitalization, asset quality and managerial efficiency seem to make a difference in the lending responses of banks to monetary policy in 2002-2009.
    Keywords: Monetary policy; Transmission Mechanisms; Bank lending channel; Turkey; Panel Data
    JEL: C23 E44 E51 E52 G21
    Date: 2012–08
  6. By: Silvio Contessi; Francesca de Nicola; Li Li
    Abstract: Middle Eastern and North African (MENA) countries stand out in international comparisons of de jure obstacles to female employment and entrepreneurship. These obstacles are mirrored in low female labor rate participation and low entrepreneurship and ownership rates. Recent research suggests a connection between international trade and female labor participation. In this article, the authors focus on the relationship between international trade and gender in the MENA countries first analyzing female labor as a production factor, and then focusing on female entrepreneurship and firm ownership. Using country and industry-level data the authors identify countries and industries characterized by comparative advantage in female-labor. They find suggestive evidence that there is a strict link between a country specialization and its measures of female labor participation consistent with theories of brain-based technological bias. Using firm-level data, the authors then study whether trade empowers female entrepreneurs in countries-industries that exhibit comparative advantage. The authors conclude that evidence supports the view that exposure to trade affects disproportionately firms in country-industries with a comparative advantage in female labor – both in terms of female employment and female entrepreneurship and ownership – in the MENA countries and for the period they study.
    Keywords: International trade ; Women - Employment ; Entrepreneurship
    Date: 2012
  7. By: Dilem Yildirim
    Abstract: This paper aims to investigate the actual nature of the interest rate pass-through to Turkish cash, automobile, housing and corporate loan rates. Focusing on the possibility of nonlinearity in the adjustment of lending rates due to financial market conditions and monetary policies, we adopt the threshold autoregressive (TAR) and momentum threshold autoregressive (MTAR) models of Enders and Siklos (2001). Empirical results suggest substantial asymmetries (nonlinearities) in all lending rates. More specifically, banks adjust their lending rates faster in response to increases in negative discrepancies from the long-run equilibrium arising from an increase in the money market rate, while they act slowly following money market rate decreases. Furthermore, the degree of reluctance of banks to follow money market rate decreases appears to vary across lending rates, suggesting the existence of sectoral heterogeneities besides asymmetries.
    Keywords: Interest Rate Transmission, Lending Rates, Threshold Cointegration
    JEL: C22 C51 G21
    Date: 2012–09
  8. By: Shaikh, Salman
    Abstract: This paper analytically compares the theoretical foundations of major economic systems i.e. Capitalism, Socialism, Mixed economy (a hybrid of Capitalism and Socialism) and the Islamic economic system. The research identifies that lack of an ethical base, unbridled pursuit of self interest in production as well as in consumption and interest based financial and monetary system are the major problematic issues in the current economic order. Socialism promises to create heaven on earth, but takes fundamental human rights and profit motive away and in the extreme case, it gives way for an autocratic regime. The paper provides brief outline of Islamic Economics and explains that Islamic economic system is a blend of natural features present in Capitalism i.e. right to private property, private pursuit of economic interest and use of market forces etc. Along with this, Islamic economic system uses some distinct features derived through Islamic economic teachings i.e. Interest free economy, moral check on unbridled self-pursuit and provision of socio-economic justice to achieve the goals of Socialism as far as is naturally possible without denying individual freedom and profit motive.
    Keywords: Economic Systems; Capitalism; Socialism; Communism; Islamic Economic System
    JEL: A13 A14
    Date: 2012–02–28
  9. By: Shaikh, Salman
    Abstract: Interest is prohibited in all monotheist religions. Apart from religion, interest is also regarded as unjust price of money capital by pioneer secular philosophers as well as some renowned economists. However, it is argued by some economists that modern day, market driven interest rate in a competitive financial market is different from usury and that the interest based financial intermediation has served a useful purpose in allocation of resources as well as in allocation of risk, given the interpersonal differences in risk preferences that exist in any society. Hence, there is a need to delineate clearly whether Islamic economics distinguishes between usury and interest. Secondly, there is also a need to reassess the economic merits and demerits of modern day competitive financial markets fueled by interest based financial intermediation. This paper tries to serve this need and presents a brief review of literature on the issue and examines the economic rationale usually presented for legitimizing interest as the price of capital. The paper analyzes the impact of interest based financial intermediation on macroeconomic variables as well as on development goals by highlighting few glaring facts and statistics and empirical evidence documented in past studies. The paper concludes with delineating the role of capital in an Islamic economy and how it can be valued in an Islamic economy without compensating it with fixed payoffs and the paper also assesses how economic and financial decisions will be altered in this new interest-free framework.
    Keywords: Interest; Usury; Islamic Finance; Islamic Banking; Financial Intermediation; Economic Justice
    JEL: E42 E52
    Date: 2012–10–31
  10. By: Broecke, Stijn (African Development Bank)
    Abstract: High unemployment and disillusioned youth lie at the basis of the ‘Arab Spring’ which has recently swept through much of the Middle East and Northern Africa. Despite changes in governments, the root problem has not been solved and political leaders, aware of the delicate and potentially explosive situation, have put the issue high up the policy agenda. This paper evaluates Tunisia’s largest labour market programme, the SIVP: an employment subsidy aimed at university graduates. Using a tracer survey of the 2004 graduating cohort, a range of matching techniques are applied to estimate the effect of the programme on a number of labour market outcomes. Although selection into the programme is not random, we cannot rule out that graduates who benefited from a SIVP have better labour market outcomes than those who did not: they are less likely to be inactive, and less likely to be unemployed – an effect which is particularly strong for graduates at highest risk of being unemployed. The results do indicate, however, that the programme is poorly targeted and hence not very cost-effective. The paper ends with recommendations for re-designing the policy, as well as pointers for future research.
    Date: 2012–10–29
  11. By: Cansu Akpinar (EA3713 - Centre de Recherche Magellan - Université de Lyon - Université Jean Moulin - Lyon III)
    Abstract: The situation where gender pay gaps are typically wider at the top of the wage distribution is known as the 'glass ceiling'. It is one of the most compelling metaphors recently used for analyzing inequality between men and women in the workplace, in order to describe a barrier to further advancement once women have attained a certain level. The general-case glass ceiling hypothesis states that not only is it more difficult for women than for men to be promoted up levels of authority hierarchies within workplaces but also that the obstacles women face relative to men become greater as they move up the hierarchy. This study presents an overview of glass-ceiling type barriers in organizations based on the perceptions of a sample of French and Turkish mid-level women managers. This study investigates how women in middle management perceive their career advancement opportunities and what they consider their organizations to be doing to support their advancement. This study begins with an introduction of the concept of a glass ceiling that prevents women from advancing, and then continues with previous studies on corporate practices and data analysis of samples from French and Turkish organizations. The objective of this work is to summarize the Glass Ceiling Phenomenon and make a comparison of different arguments of researchers. In particular with this study, It has been pointed out that most past research has been relied on indirect tests which fail to distinguish studies of the glass ceiling effect who have investigated a variety of labour market outcomes such as promotions (Powell and Butterfield 1994, Yap and Konrad(2009)), women carrier (Belgihiti Kartochian, Laufer(2004)), inequality (David J. Maume Jr.) and sex segregation (Mia Hultin 2003)
    Keywords: Glass Ceiling, Carrier Barriers, Women in Leadership
    Date: 2012
  12. By: Nabaz T. Khayyat (Technology Management, Economic, and Policy Program, College of Engineering, Seoul National University); Almas Heshmati (Department of Food and Resource Economics, College of Life Sciences and Biotechnology, Korea University)
    Abstract: This study attempts to analyze Kurdistan Region's potentials in the effective usage of mobile telecommunication. The purpose is to identify the key factors determining the adoption of mobile telephony service. A conceptual model is specified and a number of hypotheses tested with a sample of 1,458 Kurdish mobile phone users in 2010. Discrete choice methodology is used to test two models of mobile telephony acceptance: Choice of Service Providers and Usage Pattern. The results show that Korek is the most favorite service provider in Kurdistan Region and the subscribers are mostly using the service for their work. The finding has implications for competition in the market and flows of investment resources to targeted market segments with potential expansion.
    Keywords: Method, Modeling, Economics, Survey, Adoption.
    JEL: C25 C51 C81 L96 N35
    Date: 2012–09

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