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Sectoral Estimates of Informality: A New Method and Application for the Turkish Economy
Author(s) -
Elgin Ceyhun,
Sezgin Muhammed Burak
Publication year - 2017
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12151
Subject(s) - turkish , turkish economy , enforcement , informal sector , economics , measure (data warehouse) , general equilibrium theory , tax policy , macroeconomics , labour economics , business , public economics , tax reform , market economy , computer science , philosophy , linguistics , database , political science , law
In this paper, we use results of a novel survey covering 1,000 firms from 16 different sectors of the Turkish economy along with a two‐sector dynamic general equilibrium model to measure the extent of informality in these sectors. Moreover, we also evaluate the effects of two different policy tools on informality, namely, income taxes and tax enforcement. Our results show that while both are effective policy tools in dealing with informality, tax enforcement is a relatively more efficient tool and tax becomes quite ineffective at lower levels of informality.