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The Size of Informal Economy and Demand Elasticity Estimates Using Full Price Approach: A Case Study for Turkey

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Abstract

In this article, the size of informal economy is measured by using the full price method proposed by Gardes F. (2014). As an extension of this method, price elasticities are re-estimated by integrating the underreported earning shares both for wage workers and self-employers from cross-sectional data covering 2003-2006 in Turkey. The contribution of this paper is threefold: The size of informal economy is estimated by a statistical matching of the Turkish Family Budget and Time Use surveys through a complete demand system including full prices. Second, more accurate price and income elasticities are estimated by using the monetary incomes from informal activities for an emerging economy such as Turkey. Third, extended full price estimation of demand elasticities allow us to discover for which consumption group households are more likely to engage in informal work

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  • Armagan Tuna Aktuna-Gunes & François Gardes & Christophe Starzec, 2014. "The Size of Informal Economy and Demand Elasticity Estimates Using Full Price Approach: A Case Study for Turkey," Documents de travail du Centre d'Economie de la Sorbonne 14088, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:14088
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    1. Pashardes, Panos, 1993. "Bias in Estimating the Almost Ideal Demand System with the Stone Index Approximation," Economic Journal, Royal Economic Society, vol. 103(419), pages 908-915, July.
    2. Armagan Tuna Aktuna-Gunes & Christophe Starzec & François Gardes, 2014. "Une évaluation de la taille de l'économie informelle par un système complet de demande estimé sur données monétaires et temporelles," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00973494, HAL.
    3. Pissarides, Christopher A. & Weber, Guglielmo, 1989. "An expenditure-based estimate of Britain's black economy," Journal of Public Economics, Elsevier, vol. 39(1), pages 17-32, June.
    4. Armagan Tuna Aktuna-Gunes & Christophe Starzec & François Gardes, 2014. "Une évaluation de la taille de l'économie informelle par un système complet de demande estimé sur données monétaires et temporelles," Documents de travail du Centre d'Economie de la Sorbonne 14018, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    6. Duncan, G.J. & Gardes, F. & Gaubert, P. & Starzec, C., 1998. "A Comparison of Consumption Models Estimated on American and Polish Panel and Pseudo-Panel Data," Papiers du Laboratoire de Microéconomie Appliquée 1998-09, Université Panthéon-Sorbonne (Paris 1).
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Armagan Tuna Aktuna-Gunes, 2015. "Domestic activity patterns pertaining to households and informality in Turkey," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01161874, HAL.
    2. Armagan Tuna Aktuna-gunes & Francois Gardes & Christophe Starzec, 2017. "Informal Markets, Domestic Production and Demand Elasticities: A Case Study for Turkey," Economics Bulletin, AccessEcon, vol. 37(3), pages 1496-1513.
    3. Armagan Tuna Aktuna-Gunes, 2015. "Domestic activity patterns pertaining to households and informality in Turkey," Post-Print halshs-01161874, HAL.
    4. Armagan Tuna Aktuna-Gunes, 2015. "Domestic activity patterns pertaining to households and informality in Turkey," Documents de travail du Centre d'Economie de la Sorbonne 15018, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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    More about this item

    Keywords

    Informal economy; complete demand system; full prices; demand elasticity;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • D1 - Microeconomics - - Household Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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