IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/35672.html
   My bibliography  Save this paper

Labor mobility across the formal/informal divide in Turkey: evidence from individual level data

Author

Listed:
  • Tansel, Aysit
  • Kan, Elif Oznur

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 growing, heterogeneous and multifaceted informal labor market. However, the existing evidence on labor informality in Turkey is mixed and scant. Along these lines, we aim to extend the existing literature by providing a diagnosis of dynamic worker flows across distinct labor market states and identifying 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 employment states utilizing Markov transition processes. As Bosch and Maloney (2007:3) argue: “labor status mobility can be assumed as a process in which changes in the states occur randomly through time, and probabilities of moves between particular states are governed by Markov transition matrices”. Towards this end, we will use the novel Income and Living Conditions Survey (SILC) panel data set to compute the transition probabilities of individuals moving across the labor market states of formal-salaried, informal-salaried, formal self-employed, informal self-employed, unemployed and inactive. The transitions analysis is conducted separately for two, three and four year panels pertaining to 2006 to 2007, 2006 to 2008 and 2006 to 2009 transitions; for total, male and female samples; and lastly for total and non-agricultural samples. In this way, we aim to contribute to the limited body of stylized facts available on mobility and informality in the Turkish labor market. Next, we conduct multinomial logit regressions individually for each set of panel to identify the impact of individual characteristics (i.e. gender, age, education level, work experience, sector of economic activity, firm size, number of other household members, having/not having children, rural/urban) underlying worker transitions. The results reveal several relationships between the covariates and likelihood of variant transitions, and are of remarkable importance for designing policy to adress labor informality and reduce its negative externalities.

Suggested Citation

  • Tansel, Aysit & Kan, Elif Oznur, 2011. "Labor mobility across the formal/informal divide in Turkey: evidence from individual level data," MPRA Paper 35672, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35672
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/35672/1/MPRA_paper_35672.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pagés, Carmen & Stampini, Marco, 2009. "No education, no good jobs? Evidence on the relationship between education and labor market segmentation," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 387-401, September.
    2. Funkhouser, Edward, 1996. "The urban informal sector in Central America: Household survey evidence," World Development, Elsevier, vol. 24(11), pages 1737-1751, November.
    3. Gong, Xiaodong & Van Soest, Arthur & Villagomez, Elizabeth, 2004. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 1-36, October.
    4. Lehmann, Hartmut & Pignatti, Norberto, 2007. "Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine," IZA Discussion Papers 3269, Institute of Labor Economics (IZA).
    5. Enrico Fabrizi, 2009. "The Determinants of Labour Market Transitions," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 68(2), pages 233-265, July.
    6. Krstic, Gorana & Sanfey, Peter, 2007. "Mobility, poverty and well-being among the informally employed in Bosnia and Herzegovina," Economic Systems, Elsevier, vol. 31(3), pages 311-335, September.
    7. Bosch, Mariano & Maloney, William F., 2010. "Comparative analysis of labor market dynamics using Markov processes: An application to informality," Labour Economics, Elsevier, vol. 17(4), pages 621-631, August.
    8. Derek Yu, 2010. "Defining and measuring informal employment in South Africa: A review of recent approaches," Working Papers 09/2010, Stellenbosch University, Department of Economics.
    9. Bosch, Mariano & Maloney, William F., 2007. "Gross Worker Flows in the Presence of Informal Labor Markets: Evidence from Mexico, 1987-2002," IZA Discussion Papers 2864, Institute of Labor Economics (IZA).
    10. Sabine Bernabè & Marco Stampini, 2009. "Labour mobility during transition Evidence from Georgia1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 377-409, April.
    11. Bigsten, Arne & Mengistae, Taye & Shimeles, Abebe, 2007. "Mobility and earnings in Ethiopia's urban labor markets, 1994-2004," Policy Research Working Paper Series 4168, The World Bank.
    12. Silke Woltermann, 2002. "Job-Search Methods and Labor Market Transitions in a Segmented Economy - Some Empirical Evidence From Brazil," Ibero America Institute for Econ. Research (IAI) Discussion Papers 088, Ibero-America Institute for Economic Research.
    13. World Bank, 2010. "Turkey - Country Economic Memorandum Informality : Causes, Consequences, Policies," World Bank Publications - Reports 2843, The World Bank Group.
    14. Martha Alter Chen, 2007. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," Working Papers 46, United Nations, Department of Economics and Social Affairs.
    15. Bosch, Mariano & Maloney, William, 2005. "Labor market dynamics in developing countries: comparative analysis using continuous time Markov processes," Policy Research Working Paper Series 3583, The World Bank.
    16. Canavire-Bacarrezao, Gustavo Javier & Urna Soria , Luís Fernando, 2009. "Unemployment Duration and Labor Mobility in Argentina: a Socioeconomic-based pre- and post-crisis Analysis," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 12, pages 169-217, Octubre.
    17. Maloney, William F., 1998. "Are labor markets in developing countries dualistic?," Policy Research Working Paper Series 1941, The World Bank.
    18. 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.
    19. Guillermo E. Perry & William F. Maloney & Omar S. Arias & Pablo Fajnzylber & Andrew D. Mason & Jaime Saavedra-Chanduvi, 2007. "Informality : Exit and Exclusion," World Bank Publications - Books, The World Bank Group, number 6730.
    20. Galli, Rossana & Kucera, David, 2004. "Labor Standards and Informal Employment in Latin America," World Development, Elsevier, vol. 32(5), pages 809-828, May.
    21. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    22. Huitfeldt, H., 1998. "Unemployment and Labour Market Transitions in the Czech Republic: Evidence from Micro-Data," Papers 1998-5, Uppsala - Working Paper Series.
    23. Mazumdar, Dipak, 1976. "The urban informal sector," World Development, Elsevier, vol. 4(8), pages 655-679, August.
    24. Maciej Bukowski & Piotr Lewandowski, 2005. "Transitions from unemployment in Poland: a multinomial logit analysis," Labor and Demography 0511008, University Library of Munich, Germany, revised 19 Dec 2005.
    25. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," The World Bank Economic Review, World Bank, vol. 13(2), pages 275-302, May.
    26. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521589857, September.
    27. repec:lic:licosd:20608 is not listed on IDEAS
    28. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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 Group Publishing Limited.
    3. 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, vol. 7(9), pages 1-27, September.
    4. Dildar, Yasemin, 2015. "Patriarchal Norms, Religion, and Female Labor Supply: Evidence from Turkey," World Development, Elsevier, vol. 76(C), pages 40-61.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. Ayça Akarçay Gürbüz & Sezgin Polat, 2016. "Public--private wage differentials in Turkey: public policy or market dynamics?," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(3), pages 326-356, May.
    10. Tansel, Aysit & Ozdemir, Zeynel / A., 2014. "Determinants of Transitions across Formal/Informal sectors in Egypt," MPRA Paper 61183, University Library of Munich, Germany.
    11. Z. Bilgen Susanli, 2016. "Understanding the NEET in Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(2), pages 42-57.
    12. Duman, Anil, 2020. "Pay Gaps and Mobility for Lower and Upper Tier Informal Sector Employees: an investigation of the Turkish labor market," GLO Discussion Paper Series 655, Global Labor Organization (GLO).
    13. Ali Souag & Ragui Assaad, 2018. "The impact of the action plan for promoting employment and combating unemployment on employment informality in Algeria," Middle East Development Journal, Taylor & Francis Journals, vol. 10(2), pages 272-298, July.
    14. Ahmed Elsayed & Jackline Wahba, 2016. "Informalization Dynamics and Gains: Why Want a Job Contract?," Working Papers 1001, Economic Research Forum, revised May 2016.
    15. Değer Eryar & Hasan Tekgüç, 2014. "Gender Effect in Explaining Mobility Patterns in the Labor Market: A Case Study of Turkey," The Developing Economies, Institute of Developing Economies, vol. 52(4), pages 322-350, December.
    16. Ceyhun Elgin & Muhammed Burak Sezgin, 2017. "Sectoral Estimates of Informality: A New Method and Application for the Turkish Economy," The Developing Economies, Institute of Developing Economies, vol. 55(4), pages 261-289, December.
    17. Mélika Salem & Isabelle Bensidoun, 2012. "The heterogeneity of informal employment and segmentation in the Turkish labour market," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 17(4), pages 578-592.
    18. 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.
    19. 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.
    20. Slonimczyk, Fabian & Gimpelson, Vladimir, 2013. "Informality and Mobility: Evidence from Russian Panel Data," IZA Discussion Papers 7703, Institute of Labor Economics (IZA).
    21. 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.
    22. 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, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aysit Tansel & Elif Öznur Acar, 2017. "Labor mobility across the formal/informal divide in Turkey: Evidence from individual-level data," Journal of Economic Studies, Emerald Group Publishing, vol. 44(4), pages 617-635, September.
    2. Tansel, Aysit & Ozdemir, Zeynel / A., 2014. "Determinants of Transitions across Formal/Informal sectors in Egypt," MPRA Paper 61183, University Library of Munich, Germany.
    3. Cilasun, Seyit Mumin & Acar, Elif Oznur & Gunalp, Burak, 2015. "The Effects of Labor Market Reforms on the Labor Market Dynamics in Turkey," MPRA Paper 64767, University Library of Munich, Germany.
    4. 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 Group Publishing Limited.
    5. Pagés, Carmen & Stampini, Marco, 2009. "No education, no good jobs? Evidence on the relationship between education and labor market segmentation," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 387-401, September.
    6. Kan, Elif Oznur & Tansel, Aysit, 2014. "Defining and Measuring Informality in the Turkish Labor Market," MPRA Paper 57739, University Library of Munich, Germany.
    7. 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.
    8. 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.
    9. 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.
    10. Kan, Elif Oznur & Tansel, Aysit, 2014. "Defining and Measuring Informality in the Turkish Labor Market," MPRA Paper 57739, University Library of Munich, Germany.
    11. Carmen Pagés-Serra & Marco Stampini, 2007. "¿Sin formación no hay buenos empleos? Elementos de juicio sobre la relación entre la formación y la segmentación del mercado laboral," Research Department Publications 4562, Inter-American Development Bank, Research Department.
    12. Falco, Paolo & Maloney, William F. & Rijkers, Bob & Sarrias, Mauricio, 2015. "Heterogeneity in subjective wellbeing: An application to occupational allocation in Africa," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 137-153.
    13. Hatem Jemmali & Fatma El-Hamidi, 2018. "Does it Still Pay to Go to College in Egypt? Decomposition Analysis of Wage Differentials For College and Non-College Graduates," Working Papers 1224, Economic Research Forum, revised 18 Sep 2018.
    14. Enrique Alaniz & Alma Espino & T.H. Gindling, 2019. "Self-employment and labour market dynamics of men and women in El Salvador and Nicaragua," WIDER Working Paper Series wp-2019-97, World Institute for Development Economic Research (UNU-WIDER).
    15. Bargain, Olivier & Etienne, Audrey & Melly, Blaise, 2021. "Informal pay gaps in good and bad times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 693-714.
    16. Henley, Andrew & Arabsheibani, G. Reza & Carneiro, Francisco G., 2006. "On defining and measuring the informal sector," Policy Research Working Paper Series 3866, The World Bank.
    17. repec:lic:licosd:20608 is not listed on IDEAS
    18. Slonimczyk, Fabian & Gimpelson, Vladimir, 2013. "Informality and Mobility: Evidence from Russian Panel Data," IZA Discussion Papers 7703, Institute of Labor Economics (IZA).
    19. Lehmann, Hartmut & Razzolini, Tiziano & Zaiceva, Anzelika, 2011. "Job Separations and Informality in the Russian Labor Market," IZA Discussion Papers 6230, Institute of Labor Economics (IZA).
    20. Hartmut Lehmann, 2015. "Informal Employment in Transition Countries: Empirical Evidence and Research Challenges," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(1), pages 1-30, March.
    21. Paula Herrera-Id�rraga & Enrique L�pez-Bazo & Elisabet Motell�n, 2015. "Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour Market," Journal of Development Studies, Taylor & Francis Journals, vol. 51(12), pages 1683-1701, December.

    More about this item

    Keywords

    Labor market dynamics; informality; Markov processes; multinomial logit; Turkey;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:35672. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.