Informal Employment and Family Support: An Evolutionary Analysis

Renginar Dayangac and Bilge Ozturk Goktuna
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Bilge Ozturk Goktuna: Galatasaray University Economic Research Center

No 11-4, GIAM Working Papers from Galatasaray University Economic Research Center

Abstract: 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.

Keywords: Informal labour; Overlapping generations; Political competition (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011-04-01, Revised 2011-04-01
New Economics Papers: this item is included in nep-age, nep-dge and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:ris:giamwp:2011_004

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