Education And Human Capital Impact On Formal And Informal Economy

Stefan Petranov,

Stela Ralev,

Dimitar Zlatinov

Sofia University

https://doi.org/10.53656/str2025-2-6-inf

Abstract. The paper examines the role of the education system in the ongoing processes of the formal and informal economy in Bulgaria. The key is the understanding that the human capital accumulated in the education system is an important factor for economic development, which has diverse effects on the technological level and labour productivity. Several prestigious studies have shown an inverse relationship between education and the size of the informal economy and higher levels of education are generally associated with lower participation in the informal economy. Thus, the educational structure and its characteristics emerge as essential for achieving catching-up economic growth and sustainable convergence of the Bulgarian economy with the rest of the EU Member States, as well as for reducing the informal sector of the economy. The challenges to achieving these goals are discussed in the context of specific recommendations for the educational policy in Bulgaria, focusing on the educational programs' content and the educational institutions' strategic orientations.

Keywords: education; human capital; formal economy; informal economy, economic convergence

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