Some thought experiments on the changes in labor supply in Turkey☆

a r t i c l e i n f o Turkey has the lowest hours worked (the product of total employment and annual hours per worker, divided by the size of the working-age population) among the OECD countries. We study the changes in hours of work following Ohanian, Raffo, and Rogerson (Journal of Monetary Economics, 2008) and find that the intratemporal first-order condition from the neoclassical growth model accounts for the decline in total hours worked during 1998–2009 in Turkey. Hours worked increased in Turkey since 2009 and the model accounts for half of that increase between 2009 and 2011. Our findings suggest that time-varying taxes on consumption and labor play significant roles in explaining the hours worked in Turkey. The model without subsistence consumption provides a better fit with the data after 2003. The presence of government consumption in the utility function does not seem very important. Erdős first did mathematics at the age of three, but for the last twenty-five years of his life, since the death of his mother, he put in nineteen-hour days… The recent literature documents large differences in hours of work across OECD countries, and presents evidence on how they have evolved over time. 1 For example, Rogerson (2006) studies 21 OECD countries and argues that the changes in technology and government are promising candidates to explain the broad changes over the period 1956–2003. 2 Ohanian et al. (2008) study the same countries between 1956 and 2004 using the intratemporal first-order condition from the neoclassical growth model, augmented with taxes on labor income and consumption expenditures. They find that the model closely accounts for changes in hours worked. 3 We study one country in depth that has not been covered by the studies mentioned above: Turkey. The reason is that Turkey has the lowest hours worked among the OECD countries. Fig. 1 illustrates this point. ☆ The author would like to thank an anonymous referee for helpful suggestions that considerably improved the paper. In addition, the author would like to thank Ayşe İmrohoroğlu for fruitful discussions on the topic of this paper. The views expressed herein are those of the author and not necessarily those of the Central Bank of the Republic of Turkey. 1 Most of the discussion on this topic has been centered around the decline in aggregate hours of market work in Europe, particularly relative to the United States. The …