The Wage Determination Process in Turkey: An Empirical Analysis in Kaleckian Perspective

Abstract

Orthodox economists generally think about labor market that the price stability and low unemployment cannot be achieved at the same time. In this sense, the Orthodox argument discusses that a decline in the aggregate demand will decrease the money wages and real wages proportionally, and increase the volume of employment. Michal Kalecki denies such a wage policy which is consistently determined by this idea. Wages reflect the price-money wage relation in real terms. Prices set in regard to the degree of monopoly. In this context, it is assumed real wages is determined depending upon the degree of monopoly, labor productivity and price of import goods. According to Kalecki, Orthodoxian view which relates a decrease in real wages with an increase in production based on increasing marginal cost assumption and Kalecki does not accept this perspective. Kaleckian PostKeynesian labor market will be theoretically discussed and the determination process of the real wage will be empirically analyzed for Turkish economy over the period 1989:1 to 2012:4.