Measuring the effect of informal work and domestic activities on poverty and income inequality in Turkey

In this article, we propose to calculate the size of the population living in poverty, measured through uni- and multidimensional poverty indices, and the Gini coefficient using extended full (time plus money and informal earnings) incomes, from cross-sectional data covering 2003-2006 in Turkey. Thus monetary incomes are corrected by adding the earnings gathered from informal activities and the monetary values of time spent in domestic activities into declared incomes, producing an error-free estimate of the size of the population living in poverty and the Gini ratio overall. To show the effect informal activities with the domestic ones have on poverty, changes in the joint probability of being in informal activity while being considered poor is measured by means of a bivariate probit model using extended (money plus informal earnings) income and extended full incomes