Prague Economic Papers 2016, 25(4):411-426 | DOI: 10.18267/j.pep.559

The Effect of Foreign Trade on Real Wages: The Case of Turkey

Hacer Simay Karaalp-Orhan1, Orhan Sevcan Günes2
1 Faculty of Economics and Administrative Sciences, Pamukkale University, Denizli, Turkey
2 Faculty of Economics and Administrative Sciences, Pamukkale University, Denizli, Turkey

The main objective of this article is to test the existence of Stolper-Samuelson theorem between Turkey and EU-15 countries for the period 2005-2014. According to the results, a significant relationship is found between exports and real wages especially in the labour and raw intensive sectors of Turkish exports, where Turkey is relatively labour and raw abundant in comparison with the EU-15. Test results indicate a long-run relationship between exports of manufacture of wearing apparel, food, textiles and real wages, a unidirectional Granger causality relationship is found from exports to wages in manufacture of wearing apparel and food. The international trade between Turkey and the EU-15 validates to some extent the Stolper-Samuelson theorem.

Keywords: weak exogenity, Turkey, real wages, Granger causality, exports
JEL classification: C32, F14, J31, L60

Published: January 1, 2016  Show citation

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Karaalp-Orhan, H.S., & Günes, O.S. (2016). The Effect of Foreign Trade on Real Wages: The Case of Turkey. Prague Economic Papers, 25(4), 411-426. doi: 10.18267/j.pep.559
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