Macroeconomic Dynamics and Regional Disparities in Informal Employment: The Case of Türkiye

Abstract

Informal employment constitutes a significant socio-economic challenge both globally and within the context of Türkiye. As conceptualised by the International Labour Organisation, informal employment encompasses work activities that fall outside the purview of national labour legislation, taxation systems, and social security frameworks. This phenomenon not only erodes workers’ access to fundamental rights and protections but also undermines public revenues, distorts labour market dynamics, and hampers overall economic efficiency. This study aims to analyse the macroeconomic determinants of informal employment in Türkiye, with a specific focus on the regional and temporal variations observed over the period 2009-2021. Employing the spatial Durbin error model, the research identifies significant relationships between informal employment and key economic indicators. The results indicate that higher levels of GDP per capita, increased public expenditure, unemployment rates, and COVID-19 are correlated with a decline in informal employment. Notably, the findings reveal that neither the tax burden nor the inflation exerts a statistically significant impact on informal employment within the Turkish context during the examined period. This demonstrates that the influence of these factors may be context-specific or mitigated by other prevailing economic and institutional dynamics in Türkiye. The results also demonstrate that GDP per capita, unemployment, public expenditure and inflation of neighbouring regions have spillover effects on the IFE. The methodological approach adopted in this study underscores the importance of spatial and regional interactions in shaping informal employment trends.

Keywords

• Informal Employment
• Regional Disparities
• Spatial Panel Data Analysis

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