SECTORAL PATTERNS OF LABOR PRODUCTIVITY GROWTH IN TURKEY

Abstract

This study analyzes the patterns and changes in Turkey’s labor productivity between 1991 and 2018, and evaluates its contribution to overall economic growth in Turkey. Labor productivity growth is decomposed into its ‘within-sector’ and ‘between-sectors’ (structural change) components through static and dynamic measurement tools. In this way, it becomes possible to reveal whether the changes in labor productivity result from the productivity changes within a sector or from the reallocation of labor across sectors. The findings of the study indicate that labor productivity growth is the driving force of Turkey’s economic growth, even though Turkey lags behind the OECD countries in terms of labor productivity (especially in the industrial sector). One key result is that Turkey’s labor productivity growth arises mainly from the ‘within-sector’ productivity improvements rather than structural change. Some policy implications are also discussed for Turkey to raise labor productivity, enhance resource allocation and promote economic growth.