informalinturkey - TURKISH ECONOMIC ASSOCIATION DISCUSSION...

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TURKISH ECONOMIC ASSOCIATION DISCUSSION PAPER 2004/22 http://www.tek.org.tr INFORMAL SECTOR IN THE TURKISH LABOUR MARKET Tuncer Bulutay and Enver Ta ş t ı November, 2004
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INFORMAL SECTOR IN THE TURKISH LABOUR MARKET Prof.Dr. Tuncer BULUTAY Enver TA Ş TI January 2002 Ankara - Turkey
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2 CONTENTS I. Introduction . ................................................................................................................. 3 II. The Definitions and Estimates of the Informal Sector in Turkey . .............................. 6 A. Definitions of the Informal Sector . ...................................................................... 6 Data Set I ............................................................................................................. 7 Data Set II ............................................................................................................ 8 B. Estimated Values . ................................................................................................ 8 III. Main Determining Factors of the Informal Sector . ................................................. 1 3 A. Essentials of Our Method of Analysis . ............................................................... 1 3 B. Findings and Comments . .................................................................................... 1 4 IV. Composition of the Informal Sector . ........................................................................ 1 7 Status in Employment and Age Distribution ............................................................ 1 7 Women’s Share in the Informal Sector .................................................................... 1 8 The Education Level in the Informal Sector ............................................................ 20 Sectoral Distribution ............................................................................................... 2 1 Summary .................................................................................................................. 22 V. Principal Characteristics of the Informal Sector. ........................................................ 22 The Nature and Conditions of Work ......................................................................... 22 Capital, Technology and Credit Uses ....................................................................... 23 Income and Wages in the Informal Sector ................................................................ 24 Birth Places, the Reasons of Holding Job and Mobility ........................................... 28 VI. Concluding Remarks . ............................................................................................... 29 NOTES . .......................................................................................................................... 3 1 REFERENCES . .............................................................................................................. 33
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3 INFORMAL SECTOR IN THE TURKISH LABOUR MARKET I. Introduction A comparison between Turkey on the one side and developed countries on the other shows clearly that the share of agricultural employment in total employment in Turkey was much higher at the beginning of the 20 th century. In the same vein, the rate of decline in agricultural employment was much slower in Turkey during the century. The result is that agriculture’s share in total employment is substantially higher in Turkey as compared with developed countries during and at the end of the 20 th century (Table 1 ). Table 1. Sector shares in employment, 1900-2000 Circa 1 900 1 923* 1 950 1 973 1 995 2000 Agriculture Turkey 90.3 84.8 6 1 .4 44.3 35.6 France 43.4 28.0 1 0.2 4.6 Germany 39.9 23.9 7.2 2.8 Japan 64.8 43.6 1 6. 1 7.3 United Kingdom 1 3.0 6.4 3.2 2. 1 United States 38.3 1 0.5 3.2 1 .6 Manufacturing Turkey 3. 1 5.4 11 .6 1 4.8 1 7.3 France 26.0 25.8 26.9 1 8. 1 Germany 28.5 32.6 36.5 27.2 Japan 1 2.4 1 8.3 27. 1 22.5 United Kingdom 32. 1 33.9 32.2 1 8.7 United States 2 1 .0 24.8 2 1 .9 1 3.9 (*) 1 923 is the foundation date of the Turkish Republic Sources: Crafts (2000: 27); Bulutay ( 1 995a: 2 1 4-220); SIS, Household Labour Force Survey Results, 2000. A declining trend dominates also in the income share of agriculture. This share was 39.8% in 1 968 and around 1 4% in 1 999 and 2000 (SIS (State Institute of Statistics of Turkey), 2000a: 653). These mean that productivity is very low in Turkish agriculture. This low productivity and huge population constitute, in our view, the main reason of the informal sector in Turkey. The mechanism that creates the informal sector operates in the following way. The already large and surplus population in rural areas bolstered by high population growth rates, pushes the people to cities. In other words, people with low income in rural areas and working in agriculture have a strong propensity to go to the cities. In fact, this propensity was there also before 1 950. Despite this, there was little migration in Turkey before 1 950, mainly because the pulling power of the Turkish cities was very limited then. (We shall return to this
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informalinturkey - TURKISH ECONOMIC ASSOCIATION DISCUSSION...

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