Modeling the impact of government efforts to increase informal jobs on the control of unemployment

Unemployment hinders the socioeconomic development of any country and remains a persistent societal challenge. Informal employment offers earning opportunities and provides valuable work experience to a significant portion of the workforce, which plays a vital role in the sustainable development of any country. This study examines the impact of efforts made by the government to increase informal vacancies on unemployment. For this, we formulate a nonlinear mathematical model with four dynamic variables: unemployed individuals, informally employed individuals, formally employed individuals, and informal vacancies. We assume that the government offers monetary support to individuals in the informal sector to create job opportunities, and this support is allocated based on the size of the unemployed population. The proposed model is analyzed using the qualitative theory of dynamical systems. The analysis shows that the system exhibits various dynamical behaviors, including transcritical, saddle–node, Hopf, and Bogdanov–Takens bifurcations, with respect to parameters related to the job occupancy rate and the growth of informal vacancies resulting from government efforts. The findings indicate that increasing government efforts to expand informal vacancies stabilize the system at a low equilibrium level of unemployment. Furthermore, we observe that when the ratio of the rate at which informally employed individuals transition to formal jobs to the rate at which unemployed individuals secure formal jobs exceeds a certain threshold, government efforts to increase informal job opportunities may lead to an increase in the formally employed workforce.