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Labor Mobility across the Formal/Informal Divide in Turkey - Evidence from Individual Level Data

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  • Aysit Tansel

    () (Middle East Technical University)

  • Elif Oznur Kan

    () (Cankaya University, Ankara, Turkey)

Abstract

Informality has long been a salient phenomenon in developing country labor markets, thus has been addressed in several theoretical and empirical research. Turkey, given its economic and demographic dynamics, provides rich evidence for a heterogeneous and multifaceted informal labor market. This is the first study of worker transitions between sectors using panel data from Turkey. We aim to provide a diagnosis of dynamic worker flows across distinct labor market states and identify the effects of certain individual and job characteristics on variant mobility patterns. More specifically, we first develop and discuss a set of probability statistics based on annual worker transitions across distinct labor market states utilizing Markov transition processes. Next, we conduct multinomial logit regressions individually for each set of panel data to identify the impact of individual, household and job characteristics underlying worker transitions. We find evidence that mobility patterns are fairly similar across different time spans. The probability of remaining in initial state is higher than probability of transition into another state for all the labor market states, except for unemployment showing the static nature of the Turkish labor market. Gender, education and sector of economic activity are observed to display significant effects on mobility patterns. The results reveal several relationships between the covariates and likelihood of variant transitions, and are of remarkable importance for designing policy to address labor informality and reduce its negative externalities.

Suggested Citation

  • Aysit Tansel & Elif Oznur Kan, 2012. "Labor Mobility across the Formal/Informal Divide in Turkey - Evidence from Individual Level Data," Working Papers 691, Economic Research Forum, revised 2012.
  • Handle: RePEc:erg:wpaper:691
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    Cited by:

    1. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality,in: Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154 Emerald Publishing Ltd.
    2. repec:eee:eecrev:v:98:y:2017:i:c:p:282-315 is not listed on IDEAS
    3. Ahmed Elsayed & Jackline Wahba, 2016. "Informalization Dynamics and Gains: Why Want a Job Contract?," Working Papers 1001, Economic Research Forum, revised May 2016.
    4. Aydemir, Abdurrahman B. & Kırdar, Murat G., 2017. "Quasi-experimental impact estimates of immigrant labor supply shocks: The role of treatment and comparison group matching and relative skill composition," European Economic Review, Elsevier, vol. 98(C), pages 282-315.
    5. Joonmo Cho & Jaeseong Lee, 2015. "Persistence of the Gender Gap and Low Employment of Female Workers in a Stratified Labor Market: Evidence from South Korea," Sustainability, MDPI, Open Access Journal, vol. 7(9), pages 1-27, September.
    6. Dildar, Yasemin, 2015. "Patriarchal Norms, Religion, and Female Labor Supply: Evidence from Turkey," World Development, Elsevier, vol. 76(C), pages 40-61.
    7. repec:taf:rjapxx:v:17:y:2012:i:4:p:578-592 is not listed on IDEAS
    8. Binnur Balkan & Semih Tumen, 2016. "Firm-Size Wage Gaps along the Formal-Informal Divide: Theory and Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 235-266, April.
    9. Altug, Sumru & Tan, Barış & Gencer, Gözde, 2012. "Cyclical dynamics of industrial production and employment: Markov chain-based estimates and tests," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1534-1550.
    10. Abdel Rahmen El Lahga & Ines Bouassida, 2017. "Public-Private Wage Disparities, Employment and Labor Market Segmentation in Tunisia," Working Papers 1168, Economic Research Forum, revised 12 2017.
    11. Ayça Akarçay Gürbüz & Sezgin Polat & Mustafa Ulus, 2014. "In Limbo: Exploring Transition to Discouragement," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 527-551, September.
    12. Fabián Slonimczyk & Vladimir Gimpelson, 2015. "Informality and mobility," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 299-341, April.
    13. Slonimczyk, Fabian & Gimpelson, Vladimir, 2013. "Informality and Mobility: Evidence from Russian Panel Data," IZA Discussion Papers 7703, Institute for the Study of Labor (IZA).
    14. Tansel, Aysit & Ozdemir, Zeynel / A., 2014. "Determinants of Transitions across Formal/Informal sectors in Egypt," MPRA Paper 61183, University Library of Munich, Germany.
    15. Ceyhun Elgin & Burak Sezgin, 2017. "Sectoral Estimates of Informality: A New Method and An Application to Turkish Economy," Working Papers 2017/02, Bogazici University, Department of Economics.
    16. Eryar, Değer & Tekgüç, Hasan, 2013. "Gender effect in explaining the mobility patterns in the labor market: a Case study from Turkey," MPRA Paper 46006, University Library of Munich, Germany.
    17. Ali Souag & Ragui Assaad, 2017. "The Impact of the Action Plan For Promoting Employment and Combating Unemployment on Employment Informality in Algeria," Working Papers 1161, Economic Research Forum, revised 12 Jun 2017.
    18. Z. Bilgen Susanli, 2016. "Understanding the NEET in Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(2), pages 42-57.
    19. Tansel, Aysit & Ozdemir, Zeynel / A., 2014. "Determinants of Transitions across Formal/Informal sectors in Egypt," MPRA Paper 61183, University Library of Munich, Germany.
    20. United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West (ed.), 2012. "Regional Cooperation for Inclusive and Sustainable Development: South and South-West Asia Development Report 2012-2013," SSWA Books and Research Reports, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office, number brr4.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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