Declining Labor Market Informality in Turkey: Unregistered Employment and Wage Underreporting

Yusuf Bağır, Müşerref Küçükbayrak and Huzeyfe Torun

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: This paper examines the trends in labor market informality in Turkey at two margins, unregistered employment and wage underreporting. We first document the stylized facts about the informal employment and its change over the past 15 years from 2004 to 2018. While doing this, we examine the heterogeneity in the informality across regions, sectors, firm properties and worker characteristics. Second, we decompose the change in the informality rate into its components using the Oaxaca-Blinder methodology. We find that the workforce composition change in gender, age, education, occupation, and industries explains half of the decline in the informality rate from 2004 to 2018. Finally, we analyze the wage underreporting behavior in Turkish labor market using both survey data and social security registry. We show that there has been a gap between the wages earned and the wages declared to Social Security Institution among registered employees. However, this discrepancy has declined significantly in recent years.

Keywords: Informal employment; Wage underreporting; Turkey (search for similar items in EconPapers)
JEL-codes: J20 J21 J31 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ara and nep-iue
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... g+Paperss/2021/21-19 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2119

Access Statistics for this paper

More papers in Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by Sermet Pekin () and Ilker Cakar () and ().