Lurking in the Cities: Urbanization and the Informal Economy
AbstractThis study investigates the empirical relationship between the level of urbanization and size of the informal economy using cross-country datasets proxying GDP and employment shares of urban informal sector. Our estimation results indicate that there is an inverted-U relationship between informality and the level of urbanization. That is, the share of the informal sector grows in the early phases of urbanization due to several pull and push factors; however, it tends to fall in the latter phases. We also show that factors like level of taxes, trade openness, and institutional quality tend to affect the size of the informal economy.
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Bibliographic InfoPaper provided by Bogazici University, Department of Economics in its series Working Papers with number 2013/10.
Date of creation: Oct 2013
Date of revision:
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Other versions of this item:
- Elgin, Ceyhun & Oyvat, Cem, 2013. "Lurking in the cities: Urbanization and the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 36-47.
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-15 (All new papers)
- NEP-IUE-2013-07-15 (Informal & Underground Economics)
- NEP-URE-2013-07-15 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yuki, Kazuhiro, 2007. "Urbanization, informal sector, and development," Journal of Development Economics, Elsevier, vol. 84(1), pages 76-103, September.
- Wuyts, Marc, 2001. "Informal Economy, Wage Goods and Accumulation under Structural Adjustment Theoretical Reflections Based on the Tanzanian Experience," Cambridge Journal of Economics, Oxford University Press, vol. 25(3), pages 417-38, May.
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- Ceyhun Elgin, 2010. "Political Turnover, Taxes and the Shadow Economy," Working Papers 2010/08, Bogazici University, Department of Economics.
- Ceyhun Elgin & Oguz Oztunali, 2012. "Shadow Economies around the World: Model Based Estimates," Working Papers 2012/05, Bogazici University, Department of Economics.
- Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 289-314, January.
- Tokman, Victor E., 1978. "An exploration into the nature of informal--formal sector relationships," World Development, Elsevier, vol. 6(9-10), pages 1065-1075.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
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