EXTENDED SUMMARY

Informal employment refers to economic activities carried out by individuals without fulfilling legal obligations and without registration in the social security system. These activities not only lead to macroeconomic problems such as tax revenue loss and disruptions in the functioning of the social security system but also cause productivity losses in labor markets, wage inequalities, and ultimately result in low-quality employment. Moreover, working outside the social security system deprives individuals of social rights such as retirement benefits, health insurance, and job security, creating significant challenges for social policy. In this context, informal employment is not merely an economic issue but also a multidimensional problem that undermines the effectiveness of the social protection system and exacerbates social inequalities.

Informal employment stands out as one of the most significant challenges for Turkey, both from a macroeconomic perspective and particularly within labor markets. According to the report by the Ministry of Labor and Social Security, the informal employment rate in Turkey decreased from 35.4% in 2014 to 26.1% by 2023 (MLSS, 2025). Although informal employment rates have shown a declining trend over the years, they still remain at relatively high levels. In comparison, informal employment rates in the European Union during the same period ranged between approximately 15% and 13% (ILO, 2023). Self-employed individuals constitute a substantial portion of informal employment in Turkey. In terms of employment status, after unpaid family workers—who generally have an informal employment rate exceeding 85%—self-employed workers exhibit the highest rates of informality. For instance, the informal employment rate among the self-employed was calculated as 65.7% for 2019 (Şenel & Kumaş, 2019), whereas in this study it is estimated at 62.4% for 2022.

The aim of this study is to identify the factors leading to informality among self-employed individuals in Turkey and to develop policy recommendations within the framework of social policy tools to address this issue. The study utilizes data on 42,384 self-employed individuals, obtained by filtering the 2022 Turkish Labor Force Survey Microdata conducted by TurkStat. In the analysis, the individual’s registration status in the social security system (informal/formal) is defined as a binary dependent variable, and the effects of demographic and employment-related factors on informality are examined using a logistic regression model. This study is expected to make two significant contributions to the existing literature on informal employment among self-employed individuals in Turkey. First, as highlighted in the literature review section, some of the determinants considered in this study are unique and have not been extensively examined in previous research. Second, the econometric model developed to identify the determinants of informality provides another original contribution to the field.

In the empirical section of the study, before proceeding to the modeling stage, descriptive statistics of the independent variables considered in this research and the results of chi-square tests examining their statistical associations with the dependent variable were obtained. The chi-square analysis results indicated that all the independent variables examined were statistically significantly associated with the dependent variable, namely the informality status of employment. The results of the logistic regression model revealed that demographic factors such as age, education, gender, geographical region, place of birth, marital status, and household headship, as well as labor market-related factors including sector and occupational group, frequency of working from home, the presence of secondary employment, and weekly working hours, significantly influence informality among the self-employed. These findings demonstrate that informality among self-employed individuals in Turkey is not solely driven by economic reasons but is also a multilayered issue with significant societal dimensions. The greater vulnerability of women and older individuals to informality highlights the need to reassess the inclusiveness and equity of the social security system, indicating the necessity for more inclusive and functional social policies.

The informal employment of married individuals and household heads not only creates individual vulnerabilities but also risks the access of their dependents to free healthcare services. This underscores the need for fairer and more flexible contribution models in social security policies that take into account the “intra-household responsibility structure.” Moreover, the positive association between income diversification through secondary employment and formalization suggests the necessity of policies that provide income-enhancing incentives or reduce the costs of formalization for the self-employed. Overall, these findings emphasize the need for structural policy reforms that consider demographic differences, focus on vulnerable groups, and aim to enhance the inclusiveness of social security in the fight against informal employment. In this context, the results of this study are expected to offer valuable insights for social policy development.