Environmental Kuznets Curve for the Informal Sector of Turkey (1950-2009)

Abstract

In this study we investigate the empirical relationship between the size of the informal sector (as percentage of official GDP), carbon dioxide and sulfur dioxide emissions in Turkey by using annual data from 1950 to 2009 and conducting a time-series analysis using cointegration techniques. This analysis is crucial as pollution emissions may lead to unfavorable weather conditions and potentially cause environmental impacts that may adversely affect the global economy. The empirical analysis shows evidence towards the existence of an inverted-U relationship between relative informal sector size and environmental pollution indicators in the long-run. That is small and large sizes of the shadow economy are associated with little environmental pollution and medium levels of the size of the shadow economy are associated with higher levels of environmental pollution. Moreover, using multivariate cointegration techniques, we suggest and test an economic mechanism to account for this observation. This also helps us to prescribe various policy recommendations regarding pollution and energy use.

Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries

“…The presence of the EKC in Pakistan is consistent with Nasir and Rehman (2011), Shahbaz et al (2012), Ahmed and Long (2012), Ahmed et al (2015), and Ali (2015). For the Turkish economy, our results are similar to Shahbaz et al (2013b), and Elgin and Öztunalı (2014), but dissimilar with Halicioglu (2009), Ozturk and Acaravci (2010), and Kaplan et al (2011) who supported the absence of EKC for Turkey.…”

Shadow economy, institutions and environmental pollution: insights from Africa

“…According to International Labour Organization (ILO) report in 2012, shadow economy creates more than 70% employment opportunities in nations such as Zambia, Uganda, Thailand, Nepal, Lithuania, Ghana, Nigeria and Gambia, with many of these firms engaging in pollution-intensive ventures such as transportation with inefficient and outdated vehicles, automotive repair, leather tanning, artisanal mining, bleaching and dyeing, brick and tile making and metal working which on the aggregate have significant impact on the environment (Cervero, 2000; Olowu et al , 2018). The shadow economy has been recognised as one of the important sources of environmental degradation especially in the area of pollution in developing countries (Blackman and Bannister, 1998; Cervero, 2000; Maazhar and Elgin, 2013; Elgin and Oztunali, 2014a, b; Yu and Gao, 2015; Imamoglu, 2018; Olanipekun et al , 2019; Swain et al , 2020).…”

“…Although there exists numerous empirical studies that have investigated the determinants of environmental quality (Dasgupta and Maler, 1995; Harbaugh et al , 2000; Narayan and Narayan, 2010; Imamoglu, 2018); environmental quality and institutions nexus (Pargal and Wheeler, 1996; Panayotou, 1999; Hettige et al , 2000; Dasgupta et al , 2002; Cole, 2007); environmental quality and shadow economy relationship (Blackman and Bannister, 1998; Biswas et al , 2012; Croitoru and Sarraf, 2012; Mazhar and Elgin, 2013; Elgin and Oztunali, 2014a, b; Nkengfack et al , 2020), hardly have these three variables been taken together in a study particularly in Africa. Therefore, this present study adds to the literature in diverse ways.…”

The impact of informal economy on technological innovation–ecological footprint nexus in OECD countries: new evidence from panel quantile regression

“…Taking into consideration the two distinct effects of informality, several authors test for the U-shaped or inverted U-shaped relationship between informality and environmental degradation. Elgin and Öztunali (2014) test the long-run inverse U-shaped association between the informal sector and carbon and sulfur emissions in Turkey for the 1950-2009 period. The findings recommend an inverse U-shape relationship because both scale and deregulation works in the Turkish economy.…”