Essays on Labor Markets in Developing Countries

Abstract

ABSTRACT

Chapter 1 examines the log wage gap between male and female wage and salary earners in urban Turkey. Correcting for selection is crucial in analyzing this gender gap considering that Turkey has the lowest female labor force participation in the OECD. Using quantile regression techniques and accounting for the selection of women into work, I find that the impact of selection is initially positive and large, decreases towards the end of the wage distribution and becomes negative. After correcting for selection, I find a sticky floor phenomenon; that is, the gender log wage gap is positive and very high at the bottom of the wage distribution and decreases toward zero at the upper end. I find that most of the gender gap is due to differences in observed characteristics.

Chapter 2, which is coauthored with Rita Almeida, examines how stringent employment protection affects firm size by looking at the enforcement of advance notice regulations. We exploit a large micro dataset across 70 countries and explore the within country variation in the enforcement of labor laws in countries with very different advance notice procedures. The findings show that firms facing stricter enforcement of advance notice procedures tend to be smaller and have a more educated workforce. This suggests that strict employment protection rules reduce average employment and disproportionally affect the low skilled. There is robust evidence that effects are stronger for more labor intensive firms in manufacturing, especially those operating in low technology sectors. Sensitivity analysis indicates that these results do not hold in countries where the rule of law is weak.

Chapter 3 contributes to the literature by providing insights on the impact of exporting at different points of the productivity distribution. In particular, using plant-level data on India, I test the "self-selection" and "learning by exporting" hypotheses with respect to labor productivity and wages. I find that exporting firms are more productive and pay higher wages than non-exporting firms not only on average but also throughout the distribution. While the export premium on productivity is slightly increasing, the impact on wages is roughly constant throughout the distribution. Although I find no evidence of self-selection, I do find some evidence suggesting post-entry improvements in productivity and wages.