Angel-Urdinola, Diego F. and Haimovich, Francisco and Robayo, Monica (2009): Is Social Assistance Contributing to Higher Informality in Turkey?
Download (942kB) | Preview
Although still low for European standards, investments in Social Assistance (SA) transfers in Turkey have been increasing in recent years. The government is expanding access to subsidized health for individuals in the informal sector through a rapid expansion of the Green Card program. Generous non-contributory programs, such as the Green Card, may create perverse incentives for individuals to join or remain in the informal sector as they can access free services without paying taxes and/or contributions, thus potentially being able to get higher “net” labor earnings than in the formal sector. Despite the fact that the Green Card is a large and generous program offered to individuals in the informal sector, empirical analysis in this report does not find an actual impact of the program (or of its rapid expansion) on informality. The reason behind this finding is the existence of a very large differential in wages between formal and informal workers explained by differences worker’s productivity. Low-wage workers facing the possibility to move from the informal sector to the formal sector would have strong incentives to do so even if this would imply losing all SA benefits. As such, the expected monetary and job security gains of having a formal job dominate those of having an informal job even after accounting for SA transfers.
|Item Type:||MPRA Paper|
|Original Title:||Is Social Assistance Contributing to Higher Informality in Turkey?|
|Keywords:||Informality, Social Assistance, Green Card, Turkey|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
J - Labor and Demographic Economics > J8 - Labor Standards: National and International > J81 - Working Conditions
|Depositing User:||Diego Angel-Urdinola|
|Date Deposited:||27. Dec 2010 11:01|
|Last Modified:||30. Dec 2015 08:24|
Angel-Urdinola, D. (2009). Informality in Turkey: wage analysis using 2006 HBD data. Mimeo. World Bank, Washington D.C.
Aran, M. (2008). Social Protection in Turkey. Mimeo. World Bank. Washington, D.C.
Aran. M. and Hentschel, J. (2008). Household Level Health Expenditures and Health Insurance Coverage of the Poor in Turkey. Mimeo. World Bank. Washington, D.C.
SSI (2008) “Improvement of Legislation on Social Assistance System Project, Analysis Report”, Social Security Institution Directorate General of Non-Contributory Payments. Mimeo. SSI. Anakara.
Lindert (2008). Social Protection and Economic Shocks in ECA: The Social Side of the Global Crisis. Mimeo. World Bank. Washington, D.C.
Agénor, P.; Jensen, H.T.; Verghis, M.; and Yeldan E. (2006). Disinflation, Fiscal Sustainability, and Labor Market Adjustment in Turkey. World Bank Policy Research Working Paper 3804. World Bank. Washington, D.C.
Albrecht, J.; Gutierrez, C.; Paci, P., Park, B., (2009). Quantifying the Impact of the financial Crisis on Employment and Wages in a Multisector Labor Market, Draft Working Paper. World Bank, Washington, D.C.
Amuedo, C. (2004). Determinants and Poverty Implications of the Informal Sector in Chile. Economic Development and Cultural Change, Vol. 52 (2) p. 347-68.
Barros, R. (2008). Wealthier but not much Healthier: Effects of a Health insurance Program for the poor in Mexico. Mimeo, Stanford University.
Betcherman, G., Pages, C.; and Daysal, M. (2008). Do Employment Subsidies Work? Evidence from Regionally
Targeted Subsidies in Turkey. IZA Discussion Paper No. 3508. Biesebroeck, J. (2003). Wages equal Productivity: Fact or Fiction? NBER Working Paper No 10174.
Camacho, A. and Conover, E., (2007). Incentive Effects of Colombia’s Social Protection System on Workers’ Occupational Choice between Formal and Informal Employment. Mimeo, Universidad de los Andes.
Cárdenas, M.; Kugler, A.; and Bernal, R. (1998). Labor Market Regulation and Employment in Colombia: 1976-1996, Regional Research Project Sponsored by the BID, Fedesarrollo.
Chen, S. and van der Klaauw, W. (2008). The work disincentive effects of the disability insurance program in the 1990s. Journal of Econometrics, Vol.142(2): 757- 784
Flórez, C.E. (2002). The function of the Urban Informal Sector in Employment: Evidence from Colombia 1984-2000. Working Paper Documentos Cede 00395, Universidad de los Andes.
Freije, S. (2001). Informal Employment in Latin America and the Caribbean: Causes, Consequences and Policy Recommendations. Inter-American Development Bank, Labor Markets Policy Briefs Series, p. 1-51.
Gasparini, L. Haimovich, F. and Olivieri, S. (2006). Labor Informality Effects of the Programa Jefes de Hogar, Mimeo, CEDLAS, Universidad Nacional de la Plata.
Hamermesh, Daniel S. (1993). Labor Demand, New Jersey: Princeton University Press.
Heckman, and Pages C. (2003). Law and Employment: Lessons from the Latin American and the Caribbean. National Bureau of Economic Research.
Hoynes, H. (1996). Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP. Econometrica, Vol. 64 (2), p. 295-332
Imbens, G. and Lemieux, T. (2008) Regression discontinuity designs: A guide to practice. Journal of Econometrics, Vol. 142(2): 615-635
Killingsworth, M. (1983). Labor Supply. Cambridge, England: Cambridge University Press.
Nguyen and Sundaram (2009). "Delivery of Social Services in Europe and Central Asia in Recent Years". Mimeo, World Bank, Washington D.C.
van der Klaauw, W. (2008). Breaking the link between poverty and low student achievement: An evaluation of Title I. Journal of Econometrics, Vol. 142(2): 731-756 World Bank (2007). Poverty Informality: Exit and Exclusion. World Bank. Washington DC.