Insiders and outsiders in wage determination of the Turkish manufacturing industry

Abstract

The' Insider-Outsider' model suggests that both internal and external factors to the sectors play an important role in wage determination. The results of our analysis of a panel data set of Turkish two-digit manufacturing industry support this view. The industry wage determination is best seen as a kind of rent sharing in which the real wage is shaped by a mixture of insider forces (including sales per employee, unionization and financial liquidity) and outsider forces (including unemployment and alternative or outside wage).