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The Impact of the Informal Employment on the Social Security Deficits in Turkey

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  • Adem Yavuz Elveren

    () (Fitchburg State University, Department of Economics, History and Political Science)

Abstract

This study examines the impact of the formalization of the labor market on social security deficits in Turkey. After a brief discussion on the causes and consequences of the informality of the economy, the paper reveals the effect of possible developments in the labor market, --such as the reduction in informal employment, the decrease in contribution evasion, and the increase in youth employment and womens employment-- on the deficits, which has increased since the early 1990s. To assess the effect, we utilize a simple actuarial model to project the deficit through 2050 under different scenarios. The results point to the importance of increasing female labor force participation, preventing evasion of social security contributions, and show the effect of an ageing population.

Suggested Citation

  • Adem Yavuz Elveren, 2015. "The Impact of the Informal Employment on the Social Security Deficits in Turkey," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 1(1), pages 3-19, June.
  • Handle: RePEc:ana:journl:v:1:y:2015:i:1:p:3-19
    DOI: 10.22440/EconWorld.J.2015.1.1.AE.0006
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    File URL: https://journal.econworld.org/index.php/econworld/article/download/6/3
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    References listed on IDEAS

    as
    1. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
    2. Straub, Stéphane, 2005. "Informal sector: The credit market channel," Journal of Development Economics, Elsevier, vol. 78(2), pages 299-321, December.
    3. Cihan BOZKUŞ & Adem ELVEREN, 2008. "An Analysis of Gender Gaps in the Private Pension Scheme in Turkey," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 19(69), pages 89-106.
    4. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    5. Kan, Elif Oznur & Tansel, Aysit, 2014. "Defining and Measuring Informality in the Turkish Labor Market," MPRA Paper 57739, University Library of Munich, Germany.
    6. Sabine Bernabe, 2002. "Informal Employment in Countries in Transition: A conceptual framework," CASE Papers case56, Centre for Analysis of Social Exclusion, LSE.
    7. Adem Y. Elveren, 2008. "Assessing gender inequality in the Turkish pension system," International Social Security Review, John Wiley & Sons, vol. 61(2), pages 39-58, April.
    8. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World; Size, Causes, and Consequences," IMF Working Papers 00/26, International Monetary Fund.
    9. Perotti, Valeria & Sánchez Puerta, Maria Laura, 2009. "Personal Opinions about the Social Security System and Informal Employment : Evidence from Bulgaria," Social Protection Discussion Papers and Notes 89563, The World Bank.
    10. Adem Y. Elveren, 2008. "Social Security Reform in Turkey: A Critical Perspective," Review of Radical Political Economics, Union for Radical Political Economics, vol. 40(2), pages 212-232, June.
    11. 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.
    12. Adem Y. Elveren & James K. Galbraith, 2009. "Pay Inequality in Turkey in the Neo-Liberal Era, 1980-2001," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 177-206, December.
    13. Adem Yavuz Elveren, 2010. "Wage Inequality In Turkey: Decomposition By Statistical Regions, 1980–2001," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 22(1), pages 55-72, March.
    14. Kan, Elif Oznur & Tansel, Aysit, 2014. "Defining and Measuring Informality in the Turkish Labor Market," MPRA Paper 57739, University Library of Munich, Germany.
    15. Cagacan DEGER, 2011. "Pension Reform in an Overlapping Model with Multiple Social Security Systems," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 11(4), pages 563-572.
    16. Şule ŞAHİN & Helga RITTERSBERGER-TILIÇ & Adem Yavuz ELVEREN, 2010. "The Individual Pension System in Turkey: A Gendered Perspective," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 21(77), pages 115-142.
    17. Bernabe, Sabine, 2002. "Informal employment in countries in transition: a conceptual framework," LSE Research Online Documents on Economics 6389, London School of Economics and Political Science, LSE Library.
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    More about this item

    Keywords

    Informal Sector; Social Security; Turkey;

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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