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Defining and measuring informality in the Turkish labor market

Listed author(s):
  • Elif Oznur Acar

    ()

    (Department of Banking and Finance, Cankaya University)

  • Aysit Tansel

    ()

    (Department of Economics, METU; Institute for the Study of Labor (IZA) Bonn, Germany; Economic Research Forum (ERF) Cairo, Egypt)

This paper investigates how informality can be defined and measured in the Turkish labor market. Two alternative definitions of informality are used to explore their relevance and implications for the Turkish labor market using descriptive statistics. They are the enterprise definition and the social security definition. Further, contributions of individual and job characteristics to the likelihood of informality are investigated using multivariate probit analysis under the two definitions. The social security registration criterion is found to be a better measure of informality in the Turkish labor market given its ability to capture the key relationships between several individual and employment characteristics and the likelihood of informality. The study suggests that preference should be given to social security definition of labor informality for a more accurate depiction of the Turkish labor market. The suitability of the two alternative definitions of informality in the Turkish labor market and its implications have not been investigated before.

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File URL: http://www.erc.metu.edu.tr/menu/series14/1409.pdf
File Function: First version, 2014
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Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 1409.

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Length: 22 pages
Date of creation: Aug 2014
Date of revision: Aug 2014
Handle: RePEc:met:wpaper:1409
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Web page: http://www.erc.metu.edu.tr
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  1. Henley, Andrew & Arabsheibani, Reza & Carneiro, Francisco G., 2006. "On Defining and Measuring the Informal Sector," IZA Discussion Papers 2473, Institute for the Study of Labor (IZA).
  2. 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.
  3. World Bank, 2010. "Turkey - Country Economic Memorandum Informality : Causes, Consequences, Policies," World Bank Other Operational Studies 2843, The World Bank.
  4. Mélika BEN SALEM & Isabelle BENSIDOUN & Selin PELEK, 2011. "Informal Employment In Turkey: An Overview," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 34, pages 57-84.
  5. Derek Yu, 2012. "Defining and measuring informal employment in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 29(1), pages 157-175, March.
  6. Aysit Tansel, 1999. "Formal Versus Informal Sector Choice of Wage Earners and their Wages in Turkey," Working Papers 9927, Economic Research Forum, revised Sep 1999.
  7. Bromley, Ray, 1978. "Introduction - the urban informal sector: Why is it worth discussing?," World Development, Elsevier, vol. 6(9-10), pages 1033-1039.
  8. Johannes P. Jütting & Jante Parlevliet & Theodora Xenogiani, 2008. "Informal Employment Re-loaded," OECD Development Centre Working Papers 266, OECD Publishing.
  9. Henley, Andrew & Arabsheibani, G. Reza & Carneiro, Francisco G., 2009. "On Defining and Measuring the Informal Sector: Evidence from Brazil," World Development, Elsevier, vol. 37(5), pages 992-1003, May.
  10. Jaime Saavedra & Alberto Chong, 1999. "Structural reform, institutions and earnings: Evidence from the formal and informal sectors in urban Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 95-116.
  11. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
  12. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
  13. Aysit Tansel, 2001. "Wage Earners, Self Employed and Gender in the Informal Sector in Turkey," Working Papers 0102, Economic Research Forum, revised 01 Nov 2001.
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