Analysis of the Factors Determining the Probability of Registered or Informal Employment for Wage Earners in Turkey

Informal employment takes place in labor markets as a gray area between unemployment and employment. It effectively continues to exist as a temporary shelter for the unemployed in countries with higher unemployment rates. Although Turkey’s informal employment rate has decreased in recent years, it remains above the OECD average. Examining the relationship between informal employment and education in Turkey, this study also attempts to identify how small businesses that loom large in the Turkish labor market affect informal employment. The TURKSTAT 2018 Household Labor Force Survey micro data set is used for this purpose. A binary logistic regression model is applied as the method of analysis. Conclusions reveal that the probability of informal employment is much higher for female wage earners, industrial workers, part-time workers, and those with temporary employment contracts. Additionally, the positive relationship between the number of employees in enterprises and formality is another finding of this study. A strongly positive education-formal employment relationship is also identified, and the effect of education on the probability of formal employment is found to be higher for women in particular.