Effect of innovation on wages, profits, and labor turnover in Turkish manufacturing

Ekiz, Çiğdem
Innovations are among the main factors that influence long-term economic growth and affect important economic indicators such as profits and wages. Changes in profits and wages, in turn, determine the distribution of income in a society. This thesis analyzes the effects of innovation on wages, profits, and labor turnover. Changes in wages after innovations for high-wage, median-wage, and low-wage earners and male and female workers are first considered. Subsequently, changes in profits and labor productivity after innovations are explored. Finally, changes in both labor turnover rates and labor turnover wages, or the wages of new hires and leavers (both voluntary and involuntary), are analyzed. Data from the Entrepreneurship Information System (EIS) covering the population of Turkish manufacturing firms from 2006 to 2020 are used for these purposes. Patent applications and R&D activities are used as proxies for innovations. The results show that wages and profits increase after innovative activities, but high-wage and male workers benefit more than low-wage and female workers. After innovations, within-firm wage differentials increase. Innovations’ effects on labor turnover rates and wages are weak and ambiguous.


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Citation Formats
Ç. Ekiz, “Effect of innovation on wages, profits, and labor turnover in Turkish manufacturing,” M.S. - Master of Science, Middle East Technical University, 2022.