Sine Tuc - The Impact of Social Policy on Female Labor Supply in Turkey

  • Presenting author: Sine Tuc (Middle East Technical University)

  • Authors: Sine TUÇ & Erol TAYMAZ

  • Session: B03A - Behavior [1] - Tuesday 14:00-15:30 - Ceremonial Hall

  • Slides: PDF

Female labor supply is one of the leading indicators of the economic development level of countries. In developing countries, female employment and labor force participation is relatively low compared to the developed countries. Rising female labor force participation, especially in urban areas, is a significant issue for Turkey’s social welfare and economic development. The female labor supply should be well-analyzed using proper methods to understand why these rates are low. There are a few such studies for Turkey. Therefore, developing such models and analyzing women’s decision-making process is essential for the literature. Most of the existing empirical studies about measuring the effect of social and economic policies on the decision of individuals are based on static econometric estimation methods and ex-post analysis. However, making ex-ante analysis is very important to estimate and evaluate the impacts of any hypothetical policies. Microsimulation method can provide ex-ante analysis. There is just a few studies examining the impact of social policies on the female labor supply using microsimulation methods in Turkey. This study, therefore, aims to evaluate the impact of three specific social and tax policies on female labor supply using static microsimulation method. In this study, the female labor supply is modeled as a discrete choice, following the previous studies such as Van Soest (1995), Keane & Moffitt (1999) etc. Household Budget Survey micro-level data between years 2013-2019 by TURKSTAT is used. First, wage equation is estimated with the Heckman’s Two Step estimation procedure. Using these estimation results, the Structural Discrete Choice Model is estimated. Three types of mean wage models, namely expected, unconditional, and conditional mean wages are tested. The observed and unobserved heterogeneities are taken into account for the utility function. It is found that these social polices leads to increase in the employment and disposable income of females.