Extended Summary

The concept of informal economy has attracted the attention of scholars since the1970s and has been associated. Studies on the informal economy initiallyconcentrated on underdeveloped economies, known as Third World countries. Inthe 1980’s, studies on the nature and dynamics of informality in developing andindustrialized countries emerged. Although informal transactions have createdserious social, economic and political challenges around the world, many issues oftheir nature and consequences remain largely unresolved. Scientists have attemptedto explain the sources and causes of the informal economy through a variety ofopinionsThe concept of informal economy became a popular expression amongTurkish economists and politicians in the early 1990s. The solution to the incomedistribution and inflation problem depends on the formalization of theunregistered working population. The conceptual consistency could not be realizedin the studies conducted in Turkey during in this period. In estimation studies,what is measured has not been sufficiently explained and measurement methods,each of which has a different scope, are usually usedLooking at the last sixty years of Turkey, it is seen that the sectoraldistribution has changed sharply. According to World Bank data, while the shareof agriculture in GDP in Turkey was 54.9% in 1960, this rate decreased to 6.6% in2020. In the same period, the share of industry increased from 17.3% to 28.01%,the share of manufacturing sector increased from 12.7% to 19.1% and the share ofservices sector increased from 25.8% to 54.2%. It is observed that a transitionfrom the agricultural sector to other sectors took place in the said period. Thecourse of the size of the informal economy in Turkey shows parallelism with thecourse of the agricultural sectorThe main aim of the study is to investigate empirically the effects ofagriculture, industry, services and manufacturing on the informal economy inTurkey. For this purpose, using Turkey’s annual data for the period 1990-2018, theshort and long-term relationships between the variables were examined. Accordingto the empirical analysis results, as the share of industry and services sector inGDP increases, the informal economy decreases. On the other hand, with theincrease in the share of the agricultural sector in GDP, the informal economy isgrowing.Turkey is quite complex and has a structure consisting of the interaction ofmany variables. Therefore, in order to eliminate/reduce the informal economy,first of all, all the actors in the system must show their will. The public authoritymay implement all legal regulations on informality or aggravate the sanctions, but ifit does not receive the necessary support from the employees or employers, thesolution of the problem will become very difficult