The Relation between the Optimal Informal Employment Ratio and Improvement Level

Abstract

This study is an attempt to analyze the relation between the optimal informal employment ratio and improvement level of the country. Informal employment has advantages and disadvantages. Informal employment causes revenue losses consisting of both tax and social security premium. But also it causes economic growth. The previous study analyzed the optimal informal employment ratio for Turkey and in this study, the relationship between the Gross Domestic Product (GDP) and informal employment ratio (IER) for other economies will be analyzed according to their improvement level. Because in the literature there is an opinion about low informal employment ratio for high income countries and high ratio for low income countries. Because of the effect of public policy and economical structure on underground economy, it will be tried to to assess the place of Turkey according to the development level.Keywords: informal economy, developed and developing countries