INFORMAL ECONOMIC ACTIVITY AND AIR POLLUTION: IS THERE A LINK?

Abstract

This study investigates the relationship between informal economic activity and carbon emissions in Turkey through the Environmental Kuznets Curve hypothesis. Implementation of second-generation econometric methods and procedures in consideration of multiple structural breaks in the series for the period 1970 to 2015, will be conducted an investigate the impact of the size of informal economic activity on environmental degradation. The findings imply that informal economic activity significantly contributes to CO2 emissions. Furthermore, this article indicates that both legal (formal) and illegal (informal) economies exert a notable influence on environmental quality. Nevertheless, the formal economy demonstrates a notably stronger positive influence on CO2 emissions in comparison to the informal economy. Turkish authorities must prioritize precautionary measures to reduce informal economic activities, thereby safeguarding environmental quality and leveraging growth in the official economy.