Dimensions of Informal Economy and Solutions in Turkey

Abstract

The informal economy is the common problem of all economies. It covers the illegal activities which are not included in official figures and which are statistically difficult to measure. Different measurement models are used to measure the size of the informal economy. Knowledge of the characteristics, causes, effects, consequences and measures of informality will lead to registration of economic activities and increase of social welfare. Glitches in the tax system and lack of supervision trigger the informal economy. The high levels of the informal economy will reduce tax revenues. As a result of that, a reduction is observed in public services. Informal economy brings informal employment. The sizes of the informal economy also vary according to the level of development of the countries. In this study, recommendations of solution about fighting against the informal economy were mentioned, and the dimensions of the informal economy in Turkey were determined.