Informal Employment in the Kabylia Region (Algeria): Labor Force Segmentation, Mobility and Earnings

This investigation on informal employment uses a pooled sample of 3,290 workers from two household surveys conducted at a regional level, which proves quite representative and the only one of its kind in Algeria. First, multinomial logistic regressions applied to the overall sample capture the individual determinants of access to the formal vs. informal segments of the labour market. Being a young single female with low educational attainment increases the likelihood of informal employment. Second, two subsamples show that labour market segmentation does not preclude occupational mobility of three out of five workers, which occurs most often from informal segments towards formal segments, due to age (youth), gender (female) and (low) educational attainment. Third, earnings functions analyse the determinants of wages for the subsample of 1,753 formal and informal employees (twenty per cent, among which three out of five are males). The wage gap between formal and informal employees, over twenty-five per cent, may be due to the difference in human capital and is higher among men than among women. The gender pay gap is higher in formal employment than in informal employment. Last, a decomposition model disentangles the explained and unexplained parts of the formalinformal employees segmentation (over two thirds are explained, rather from the supply-side than from the demand-side), as well as the male/female divide, whereby unexplained variables account for the highest share.