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Determinant of Transitions Across Formal/Informal Sectors in Egypt

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  • Aysit Tansel

    () (Middle East Technical University, Ankara, Turkey)

  • Zeynel Abidin Ozdemir

    ()

Abstract

Informality is a salient feature of labor market in Egypt as it is the case with many developing countries. This is the first study of the determinants of worker transitions between various labor market states using panel data from Egypt. We first provide a diagnosis of dynamic worker flows across different labor market states. We develop transition probabilities by gender across different labor market states utilizing Markov transition processes. Next, we identify the effects of individual, household, job characteristics and location on different mobility patterns by estimating a multinomial logit regression. The results point to the highly static nature of the Egyptian labor market. Government employment and the out of labor force are the most persistent labor market states. Further, only a few of the explanatory variables except high levels of education are found to have predictive power in explaining the transitions from formal wage, informal wage, self-employment, unemployment government employment and out of labor market states.

Suggested Citation

  • Aysit Tansel & Zeynel Abidin Ozdemir, 2014. "Determinant of Transitions Across Formal/Informal Sectors in Egypt," Working Papers 899, Economic Research Forum, revised Dec 2014.
  • Handle: RePEc:erg:wpaper:899
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    References listed on IDEAS

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    Cited by:

    1. Aysit Tansel & Halil Ibrahim Keskin & Zeynel Abidin Ozdemir, 2015. "Is There An Infırmal Employment Wage Penalty in Egypt?," ERC Working Papers 1508, ERC - Economic Research Center, Middle East Technical University, revised Sep 2015.
    2. Shaimaa Yassin, 2016. "Constructing Labor Market Transitions Recall Weights in Retrospective Data: An Application to Egypt and Jorda," IRENE Working Papers 16-07, IRENE Institute of Economic Research.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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