DETERMINANTS OF FORMAL AND INFORMAL SECTOR EMPLOYMENT IN THE URBAN AREAS OF TURKEY

By applying a multinomial logit model and economic theory to household budget survey data, this study examines the determinants of formal and informal sector employment in the urban areas of Turkey. The analysis is carried out for men and women separately. The findings show that determinants of formal and informal employment in Turkey`s urban labor market vary by gender. Special emphasis is placed on the importance of sex (being male rather than female), marital status, household-headship and education variables, of which the first three presents the disadvantaged position of women in the labor market. Most women work in the informal sector despite significant improvements in their education attainment. Overall results confirm that the urban labor market is heterogeneous and reveal how labor supply factors are valued in the labor market. They also indicate the existence of sex discrimination in the labor market

Keywords:

Formal employment, Informal employment, Sector choice determinants, Turkey Multinomial Logistic Regression,

PDF

___

Pradhan, M. and A. van Soest.1995. “Formal and Informal Sector Employment in
Urban areas of Bolivia. “ Labor Economics, 2: 275-297. Perry, G.E., Maloney, W.F., Arias, O.S., Fajnzylber, R., Mason, A.D. and Saavedra-Chanduvi, J. (2007), Informality: Exit and Exclusion, Washington, DC:
World Bank, (chapter 1). Mazumdar, Dipak (1989) “Microeconomic Issues of Labour Markets in
Developing Countries: Analysis and Policy implications”. An EDI Seminar Paper, Economic Development Institute of the World Bank, Washington D.C. Hussmanns, Ralf (2004), “ Measuring the informal economy: From employment in the Informal Sector to Informal Employment” Policy Integration Department
Bureau of Statistics Working Paper 53, Geneva, ILO. GINDLING, T. (1991), “Labor Market Segmentation and the Determination of
Wages in the Public, Private-Formal and Informal Sectors in San-Jose, Costa- Rica”, Economic Development and Cultural Change, Vol.39, No. 3., pp. 585-605. Todaro, Michael P. and Harris John R. (1970), “Migration, Unemployment and Development: A Two sector Analysis”, The American Economic Review, Vol.60, No 1, pp 126-142.
Perry, G. E., W.F. Maloney, O.S. Arias, P. Fajnzylber, A.D. Mason and J. Saavedra-Chhanduvi (2007), Informality: Exit and Exclusion, World Bank, Washington D.C.
MALONEY, W.F. (2004), “Informality Revisited”, World Development, Vol. 32, No. 7, pp. 1159-78.
Fields, Gary (2005), “A Guide to Multisector Labour Market models”, World
Bank Social Protection Discussion Paper Series No. 0505, World Bank, Washington D.C.
Lewis, W. Arthur ( 1954), “Economic Development with Unlimited Supplies of
Labour”, in Manchester School, Vol.22(2), pp. 139-191. Gong, X. and A. van Soest 2002. “Family Structure and Female Labour Supply in
Mexico” Discussion Paper No. 214, Institute for the Study of Labour(IZA). Bonn, Germany. Hunter, B.H. and Gray, M.C. (1999), “Further Investigations into Indigenous
Labour supply: What Discourages Discouraged Workers?” Centre for Aboriginal Economic Policy Research (CAEPR) Working Paper No. 2/1999. Australia.
Shoshana, N., and G. Shoshana (2008), “The Extra Burden of Moslem Wives:
Clues from Israeli Women’s Labour Supply”. Economic Development and Cultural Change, 46(3): 491–517. Kolev, A. (1998), “Labour Supply in the Informal Economy in Russia during
Transition” Centre for Economic Policy Research Discussion Paper No. 2024. London.
Lanot, G. and C. Muller. 1997. “Dualistic sector choice and female labour supply:
Evidencefrom formal and informal sectors in Cameroon”. Working Paper Series/97-9. Centre for the Study of African Economies, University of Oxford. Blundell, R., J. Ham and C. Meghir. 1987. “Unemployment and female labour supply”. The Economic Journal, 97: 44–64.
Myint, H. 1985. “Organizational dualism and economic development”. Asian
Development Review,3(1): 24–42. Nwanganga, S. (1980), “Women in the Urban Labour Markets of Africa: The case of Tanzania”. Staff Working Paper No. 380. The World Bank, Washington, D.C.
Ranis, G. and J. Fei. (1961). “A theory of economic development”. American
Economic Review, 51(4): 533–65. Wamuthenya R. Wambui R. (2010), “Determinants of Employment in the Formal and Informal Sectors of the Urban areas of Kenya” AERC Research Paper 194.