Abstract:

The informal economy is a comprehensive concept that involves all unregistered economic activities and confronts us in the form of informal employment in the business life. The informality in the economy, one of the principal problems in Turkey, is also crucially significant in terms of the dimension of informal employment. Even though the role of social, economic and cultural structures of countries in the emergence and growth of informal employment is enormous, it has been revealed that the financial burdens on employment, namely the tax wedge, are one of the most important causes of informal employment in Turkey. The high tax wedge is an element that erodes the disposable income with regards to the wage earners and increases labor costs with regards to the employers, and this eventually leads to the growth of informal employment. Therefore, it is significant subject to take into consideration the tax wedge over employment for the resolution of the problem of informal employment

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