The impact of Turkey’s 2008 labor reform on informal employment across sectors

Abstract

This thesis estimates the impact of 2008 Turkish Employment Subsidy Program which was enacted after the 2008 crisis to create formal employment opportunities in each main sector for females and young males who are regarded disadvantaged group. The design of the subsidy program is similar to a natural experiment in which women and young men are defined as treatment groups. The impact of the program is analyzed by using differences-in-difference method and utilizing the data of Turkish Household Labor Force Survey. Estimation results show that the program looks effective in decreasing informal employment in each sector. However, after excluding the certain age groups from the data due to heterogeneity problems; while it still remains effective in decreasing the informal employment for the industrial sector, it disappears for agricultural and services sectors.