Defining and Measuring Informality in the Turkish Labor Market - Economic Research Forum (ERF)

Defining and Measuring Informality in the Turkish Labor Market

Elif Oznur Acar and Aysit Tansel


Date:
December, 2014

NO.
897

Length:
22 pages

Topic:
J2. Demand and Supply of Labor
O1. Economic Development

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.

Elif Oznur Acar


Research Fellows

Aysit Tansel

Professor, Middle East Technical University, Turkey


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