Labor mobility across the formal/informal divide in Turkey

Abstract

Purpose This paper, the first one to use individual-level Turkish panel data, examines the labor market transitions in Turkey along the formal/informal employment divide. The purpose of this paper is to contribute to the limited body of empirical evidence available on mobility and informality in the Turkish labor market. Design/methodology/approach Toward this end, the authors use Turkish income and Living Conditions Survey panel data for 2006, 2007, 2008 and 2009 to compute the Markov transition probabilities of individuals moving across six different labor market states: formal-salaried (FS), informal-salaried, formal self-employed, informal self-employed, unemployed and inactive. In order to examine the nature of mobility patterns in more detail, the authors then estimate six multinomial logit models individually for each transition adopting a number of individual and employment characteristics as explanatory variables. Findings The authors find evidence that mobility patterns are fairly similar across different time spans, the probability of remaining in initial state is higher than the probability of transition into another state for all the labor market states, except for unemployment, there is only very limited mobility into the FS state. Gender, education and sector of economic activity are observed to display significant effects on mobility patterns. The results reveal several relationships between the covariates and likelihood of variant transitions. Research limitations/implications This study provides a comprehensive and detailed diagnosis of the Turkish labor market. The market is observed to display a rather static structure throughout the period considered. The results indicate that a well recognition of underlying dynamics may help policy makers to produce various effective tools for addressing informality. Originality/value First study to analyze labor market mobility across formal/informal sectors using newly available panel data.

Self-employment and labour market dynamics of men and women in El Salvador and Nicaragua

“…Women are more likely than men to transition from any other state into unfavourable labour market states such as informal employment and informal selfemployment. Tansel and Kan (2017) write that 'our findings clearly support the view that females are significantly disadvantaged in terms of labor mobility' (Tansel and Kan 2017: 32). Education increases the probability of transitions into formal employment and decreases the probability of transitioning into informal employment.…”

“…Women entrepreneurs are predominantly concentrated in service activities, while men tend to be owners of companies engaged in manufacturing and construction activities (Bardasi et al 2011). Tansel and Kan (2017) examine transitions between formal employment, informal employment, formal self-employment, and informal self-employment in Turkey. As with other studies, they find that formal employees are the least mobile and the unemployed are the most mobile.…”

Informality and mobility

“…For post‐socialist countries symptoms of segmentation seem to be clearer than in Latin America. Tansel and Kan () also argue for the existence of segmentation and a static employment structure in Turkey.…”

An Empirical Analysis of the Effects of Syrian Refugees on the Turkish Labor Market

“…As explained in section 2.1, the study used social security as the measurement criterion for informality. Using the same criterion, Tansel and Acar (2017) analyzed the possibility of transition across formal/informal sectors in Turkey. They found that the formal salaried state is more stable than the other states and that mobility into the formal salaried state is very restricted.…”