LIBERALIZATION AND TURKISH LABOR MARKETS: 1980-2010

Hakan ERCAN (METU)

Turkey has liberalized its trade in the 1980's and its capital account in 1989. It joined the customs union with the EU in 1996. Starting with an import substituting economy, it now has basically completed its integration into the world commodity and financial markets. During these transformations, it has gone through a series of crises, as well. In the last decade, it has experienced the 1994 domestic financial crisis, it has suffered the after effects of 1997 East Asian crisis and 1998 Russian crisis. It suffered two earthquakes in 1999, started a stabilization program in 2000 and has seen its demise in 2001, only to be followed by another IMF and WB sanctioned demand contracting stabilization program. During the last twenty five years Turkey never had single digit annual inflation figures. Through this macroeconomic turmoil, Turkish labor markets had to adjust and transform. This paper first analyzes Turkish labor markets through the last two decades setting the scene against its own macroeconomic history and against global wage inequality trends that resulted from labor saving technological progress. Secondly, based on the above analysis and population forecasts by age and gender through the next decade, it reveals a very likely picture of the Turkish labor markets in terms of participation and employment patterns through 2010.