Informality in a micro economy: Measurement, composition and consequences

Abstract

This article measures the extent of - and unrecorded income generated by - informal employment in a micro economy characterized by poor governance. Household survey and census data are used to estimate the number of informal workers in Northern Cyprus and analyse the characteristics of informal employment, for the period 2004-11. Informal workers are mostly comprised of citizens with no social security registration, illegally employed immigrants or second-job holders who have not registered their second jobs. In terms of value added, the estimated size of the informal economy is 9.1 per cent and 12.2 per cent of GNP in 2006 and 2011, respectively.