Turkey is the only founding member of the OECD that has not converged to the US in terms of per-capita GDP since 1950: its real GDP per capita is stuck at 20% of that of the US. At a
proximate level, we show that Turkey's relative stagnation over the past 50 years is due to: (1) the relative decline in its labor force participation, and (2) the relative stagnation of its TFP. We argue that the first fact is due to policies of high personal income taxation, and high social security contributions for
both employees and employers. The second fact we argue is due to price support policies in agriculture, which distorted the allocation of resources in favor of agriculture, thereby delayed the process of the structural transformation. We develop a dynamic general equilibrium model with agricultural and non-agricultural sectors. The production of the non-agricultural good can take place in the market or the household sector. We show the extent to which these policies can account quantitatively for Turkey's relative stagnation
Relative Stagnation, Labor Force Participation, Income Taxes
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.