Informality: Family ties and retirement income

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Bilge O. G., DAYANGAÇ R.

Research in Economics, vol.78, no.1, pp.73-82, 2024 (ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 78 Issue: 1
  • Publication Date: 2024
  • Doi Number: 10.1016/j.rie.2024.01.004
  • Journal Name: Research in Economics
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, International Bibliography of Social Sciences, Business Source Elite, Business Source Premier, EconLit, zbMATH
  • Page Numbers: pp.73-82
  • Keywords: Auditing, Informal employment, Pensions, Social norm of support
  • Galatasaray University Affiliated: Yes

Abstract

This paper suggests a demand side analysis of informal employment characterised by incompliances with labour tax regulation, using a general equilibrium model with overlapping generations. A public social insurance provides benefits to formal employees in retirement, while we allow for an informal insurance mechanism for informal employees through a social norm of mutual support. The objective of the paper is to evaluate the impact of auditing policy and social norms on growth and social welfare. We define the private transfer rate to the informal population and provide an analysis on the impact of social norms to wage levels, growth and welfare.