Wage penalty for temporary workers in Turkey: Evidence from quantile regressions

The paper estimates the wage gap between the employees with different contract types in Turkey. We first employ a quantile regression method and then decompose wage differentials along the distribution. Our results indicate that nonpermanent contract holders are more common among the low‐skilled and low‐wage group. While there is a wage penalty for having temporary contracts at the bottom end of the distribution, nonpermanent workers at the upper end also suffer from a wage gap in Turkey. The findings imply a non‐monotone pattern in Turkey where both sticky floor and glass ceiling effects are observable. These effects are persistent over time as both bottom‐ and top‐earner temporary workers are penalized, and the wage gap displays almost no change for each group. Also, from the quantile decomposition, we revealed that wage gap for low earners can be mainly attributed to the labor market characteristics. On the other hand, returns are primarily responsible for explaining the wage gap for high earners suggesting that they are subject to unfavorable conditions in the labor market.