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Informal Employment and Family Support: An Evolutionary Analysis

  • Senses Dayangac, Renginar

    (Galatasaray University Economic Research Center)

  • Ozturk Goktuna, Bilge

    (Galatasaray University Economic Research Center)

The model presents the dynamics and the equilibrium of an overlapping generation economy when there is informal employment, a pension system and altruistic agents. The model inspires from stylised facts on developping and Euro-Mediteranean countries where family plays a central role in risk insurance. The rational is emphasised by lower costs compared to private and public insurance systems. Given an initial distribution of the informally employed individuals, the model captures the e¤ects of social security decisions and anticipated bequests on the preference of the agents for formal or informal employment. The impact of scal policies on the distribution of employment to formal and informal categories is analysed through the political competition. We show that opportunist behaviour would amplify the relative size of the informal employment.

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Paper provided by Galatasaray University Economic Research Center in its series GIAM Working Papers with number 11-4.

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Length: 25 pages
Date of creation: 01 Apr 2011
Date of revision: 01 Apr 2011
Handle: RePEc:ris:giamwp:2011_004
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  1. Johannes P. Jütting & Jante Parlevliet & Theodora Xenogiani, 2008. "Informal Employment Re-loaded," OECD Development Centre Working Papers 266, OECD Publishing.
  2. Juan Ramón de Laiglesia, 2008. "Living with Duality: Fiscal Policy and Informality in Latin America," OECD Development Centre Policy Insights 81, OECD Publishing.
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