Abstract

The past decade has witnessed an accelerated digital transformation and increasing reliance on the internet, leading to profound changes in labor markets and economic activities. In contrast, the informal economy is prevalent in many developing countries, where it has played a vital role in providing employment opportunities and ensuring income security for large segments of the population.
The aim of this study is to clarify the relationship between digitization and informal employment in Iraq, using time series models and cointegration techniques to analyze the impact of internet penetration on informal employment. The importance of this study lies in:
1. Providing a precise statistical analysis of the dynamic relationship between digitization and the informal sector, highlighting the impact of digital transformation on informal employment.
2. Providing policy recommendations to leverage digital transformation to integrate the informal economy into the formal sector.