Identification of regions in regional minimum wage implementation: A cluster analysis example

The regional minimum wage implemented in Türkiye between 1967-1974 has been replaced by a single national minimum wage system since 1974. However, nowadays it is brouht up to agenda by national and international organizations, and it is predicted that main economic indicators such as employment, unemployment, informal employment and regional income and living conditions will improve in the case of the implementation of the regional minimum wage. Since the regional minimum wage takes into account the subsistence level of the employees, regional payment capacity and economic and social conditions, it allows to determine a competitive wage level between regions. The regional minimum wage constitutes one of the most ideal minimum wage systems in cases where the levels of economic and social development are quite different from each other and where irregular and excessive migration is experienced. In this study; under the assumption that the regional minimum wage has been implemented, the usability of the Clustering Analysis methods for the determination of regions has been attempted to be examined in Türkiye. For this purpose, hierarchical clustering methods was applied to the sample group of each year based on the 2015-2020 period separately and obtained dendrograms (tree diagrams) were evaluated. Within the framework of the results obtained it has been concluded that regions with the same economic and social conditions in terms of the variables included in the analysis are located in the same clusters and regions with different economic and social conditions are in different clusters. Regions can be classified by using cluster analysis methods if the regional minimum wage is applied. According to the results of the analysis using the data of 2015 and 2016, the ideal number of clusters is 4; On the other hand, in the results of the analysis using the data of 2017, 2018, 2019 and 2020, it was concluded that the ideal number of clusters is 3. Keywords: Minimum Wage, Regional Minimum Wage, Clustering Analysis.