Occupational Change and Labor Market Polarization in Turkey

Recent empirical studies on both advanced economies and developing economies argue the polarization impact of technology on labor markets. On the other hand, not all the labor markets display polarized wage/skill hierarchy. Besides, explanatory variables for polarization effects such as technology, the role of institutions are arguable. Based on these arguments, I analyze occupational change and labor market polarization in Turkey. I defined jobs as occupations by industries, and then I categorize jobs into 5 quantiles by means years of schooling and mean monthly income to display wage/skill hierarchy. I analyze the employment change in each quantile from 2005 to 2018. Empirical findings show skill upgrading in the labor market; whereas employment expansion occurred in the top and bottom income quantiles and the middle-income groups are vanishing. These findings suggest that the labor market is polarized and also indicates an economic mismatch. The impact of technology as an explanatory variable is open for further research, but the case fits into Routine Biased Technological Change. Yet, the role of institutions through a disproportionate expansion of employment in the public sector addresses the role of institutions as an explanatory variable for polarization.