Persistence of informal employment in Turkey

Başak, Zeynep
The primary aim of this study is to examine the persistence of informal employment in Turkey and to test two hypotheses proposed by labor market segmentation theory (LMS) which suggest that there are persistent wage, security, working conditions, and control mechanisms differentials between the various segments of the labor market and the labor mobility between the segments is limited. In doing so, two data sets have been utilized: the Household Labor Force Survey (2006-2011) and the retrospective labor market history survey we have conducted. The findings of the three main essays, in addition to the one where the different conceptualizations of the informal sector have been discussed, confirm the segmented nature of the Turkish labor market. Specifically, by investigating the determinants of labor force participation decision and wage inequality in Turkey, the first essay provides clues on the segmentation between formal and informal employment due to the substantial wage differences between them. The second essay investigates the effect of variables over which one has no control on the degree of inequality of earnings in Turkey. The results reveal that gender accounts for the largest share of opportunity inequality. The last essay is devoted to analyze labor market transitions across four labor market states: formal employment, informal employment, non-employment, and out of labor market/schooling. The existence of limited labor mobility between formal and informal employment is verified through the computation of transition probabilities of individuals and the estimation results of a multi-state multi-spell competing risks model.


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Citation Formats
Z. Başak, “Persistence of informal employment in Turkey,” Ph.D. - Doctoral Program, Middle East Technical University, 2013.