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Is the Pattern of Wage Differentials Stable Over Time? A Cluster Analysis in Turkish Manufacturing Industry

By Emel Memis

October 25, 2005

Abstract

This paper presents empirical measurements of inter-industry hourly wage differentials in Turkish manufacturing industry. Applying cluster analysis to the path of deviation of sub-industry wage payments from the industry average, it attempts to highlight the pattern of these persistent inequalities between subindustries during the export-led industrialization phase of Turkish economy. The degree of wage inequality among different sub-industries of the sector may hold the key to understanding the changes in industrial structure and the growing vulnerability of the economy to outside shocks. The results underscore the importance of reclassifying industrial data specific to the variable of analysis. Data reveal widening inter-industry wage differentials during the period, contrary to what is generally predicted by conventional theory. The paper concludes by providing possible sources of the observed pattern of wage differentials.

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