THE IMPACT OF MACROECONOMIC DYNAMICS AND INSTITUTIONAL CAPACITY ON INFORMAL EMPLOYMENT: THE CASE OF TURKIYE

Informal employment reflects structural vulnerabilities in developing labor markets and is closely linked to macroeconomic stability and institutional quality. This study has examined the macroeconomic and institutional determinants of informal employment in Turkiye over the 2000 to 2024 period. In the empirical model, informal employment is the dependent variable, while inflation, economic growth, and institutional capacity are the independent variables. The Autoregressive Distributed Lag bounds testing approach is employed to assess both short run and long run relationships among the variables. The findings indicate that inflation, economic growth, and institutional capacity all have statistically significant effects in increasing informal employment. These results suggest that in Turkiye, formal job creation remains limited during periods of economic expansion and price instability, while institutional structure plays a decisive role in labor market formalization. The study offers empirical evidence and policy implications for addressing informal employment within a macro institutional framework.