DETERMINANTS AND TRENDS OF WAGE INEQUALITY IN THE WORLD AND IN TURKEY

Abstract

Equal distribution of wages, which is a source of motivation and means of sustaining the lives of employees, stands out as an important issue. Therefore, this distribution reveals the differences in the welfare level of employes. Identifying the factors affecting the differences can be an important step in reducing the severity of the differences. Thus, progress can be made in terms of employee motivation, productivity, welfare and stability of the labor market. This study aims to explain wage inequality in a theorical framework within the context of neoclassical economics and human capital theory, identify the factors affecting inequality and analyze the trend of inequality in Türkiye and other countries. Empirical studies in the literatüre on the subject are discussed. In addition, wage inequality indices (Gini, Theil’s T Statistic and 90/10 ratio) calculated with the date obtained from the Household Labor Force Survey for the period 2009-2020 in Türkiye are used to analyze the course of wage inequality at the regional level. The Gini/National Income index for Türkiye and other countries and the 1980-2022 period are also included in the scope of this analysis. Wage inequality at the regional level in Türkiye has been on a downward trend since 2010, whilw in other countries it has fluctuated, especially after the 2007-2008 period when income distribution bottomed out. In order to improve wage inequality in Türkiye, legal regulations and union activities need to be supported.