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Determinants of Transitions across Formal / Informal Sectors in Egypt

Author

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  • Tansel, Aysit

    (Middle East Technical University)

  • Ozdemir, Zeynel Abidin

    (Ankara HBV University)

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

  • Tansel, Aysit & Ozdemir, Zeynel Abidin, 2015. "Determinants of Transitions across Formal / Informal Sectors in Egypt," IZA Discussion Papers 8773, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8773
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    Cited by:

    1. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2008. "Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data," MPRA Paper 89540, University Library of Munich, Germany.
    2. 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.
    3. Ahmed Elsayed & Jackline Wahba, 2016. "Informalization Dynamics and Gains: Why Want a Job Contract?," Working Papers 1001, Economic Research Forum, revised May 2016.
    4. Durdana Qaiser Gillani & Toseef Azid, 2017. "The informal Employment in Southern Punjab: An Empirical Evidence," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 6(3), pages 141-147, September.
    5. Roberta Gatti & Diego F. Angel-Urdinola & Joana Silva & Andras Bodor, 2014. "Striving for Better Jobs : The Challenge of Informality in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 19905.
    6. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2008. "Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data," MPRA Paper 89540, University Library of Munich, Germany.
    7. Shaimaa Yassin, 2016. "Constructing Labor Market Transitions Recall Weights in Retrospective Data: An Application to Egypt and Jordan," Working Papers 1061, Economic Research Forum, revised 11 Jan 2016.

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    More about this item

    Keywords

    multinomial logit; labor market dynamics; informality; Markov processes; Egypt;
    All these keywords.

    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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