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Micro-determinants of informal employment in the Middle East and North Africa region

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  • Angel-Urdinola, Diego F.
  • Tanabe, Kimie

Abstract

This note assesses the main micro?determinants of informal employment in the Middle East and North Africa (MENA) region from a human development stand point. It's main purpose is to quantify the patterns of labor informality (defined as the share of all employment with no access to social security) according to age, gender, education level, employment sector, profession, marital status, employment status, and geographic area in a selected group of countries in the region. Results indicate that the size of the public sector and the size of the agriculture sector are perhaps the main correlates of informality in the region. Countries where agricultural employment still constitutes a large share of overall employment (such as Morocco and Yemen) are associated with higher levels of overall informality. On the contrary, countries with larger public sectorsand more urbanized such as Egypt, Syria, and Lebanon, display lower levels of overall informality. The existence of a large public sector, still associated with generous benefits and better employment quality, creates an important segmentation between public and private employment in many MENA countries. Informality rates are very high among youth between ages fifteen and twenty-four. After age twenty-four, informality decreases rapidly until individuals reach prime working age (forty to forty?five years). This rapid decrease in informality rates goes hand in hand with a rapid increase in public sector employment, suggesting that informal workers enter into public sector jobs as they move from youth into adulthood. Results also indicate that the average worker in the informal sector is disadvantaged versus the average worker in the formal sector, as they are uncovered against social risks and are generally employed in low-productivity/low pay jobs.

Suggested Citation

  • Angel-Urdinola, Diego F. & Tanabe, Kimie, 2012. "Micro-determinants of informal employment in the Middle East and North Africa region," Social Protection and Labor Policy and Technical Notes 66594, The World Bank.
  • Handle: RePEc:wbk:hdnspu:66594
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    References listed on IDEAS

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    1. Loayza, Norman V. & Rigolini, Jamele, 2006. "Informality trends and cycles," Policy Research Working Paper Series 4078, The World Bank.
    2. R. Hirschowitz, 1989. "The Other Path: The Invisible Revolution in the Third World," South African Journal of Economics, Economic Society of South Africa, vol. 57(4), pages 266-272, December.
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    Cited by:

    1. Mai Hassan & Friedrich Schneider, 2016. "Modelling the Egyptian Shadow Economy: A Currency Demand and A MIMIC Model Approach," CESifo Working Paper Series 5727, CESifo Group Munich.
    2. Umapathi, Nithin & Wang, Dewen & O'Keefe, Philip, 2013. "Eligibility thresholds for minimum living guarantee programs : international practices and implications for China," Social Protection and Labor Policy and Technical Notes 83118, The World Bank.
    3. AfDB AfDB, 2016. "North Africa - Working paper - Addressing informality in Egypt," Working Paper Series 2327, African Development Bank.
    4. AfDB AfDB, . "ORNA - North Africa - Annual Report 2014," Annual Report, African Development Bank, number 2139.
    5. Xue, Jinjun & Gao, Wenshu & Guo, Lin, 2014. "Informal employment and its effect on the income distribution in urban China," China Economic Review, Elsevier, vol. 31(C), pages 84-93.
    6. Alshamsan, Riyadh & Leslie, Hannah & Majeed, Azeem & Kruk, Margaret, 2017. "Financial hardship on the path to Universal Health Coverage in the Gulf States," Health Policy, Elsevier, vol. 121(3), pages 315-320.
    7. AfDB AfDB, . "The AfDB Group in North Africa 2014," Country Brochure, African Development Bank, number 2138.
    8. Tareq Sadeq, 2014. "Formal-Informal Gap in Return to Schooling and Penalty to Education-Occupation Mismatch a Comparative Study for Egypt, Jordan, and Palestine," Working Papers 894, Economic Research Forum, revised Dec 2014.
    9. Robalino, David A. & Weber, Michael, 2013. "Designing and implementing unemployment benefit systems in middle and low income countries : key choices between insurance and savings accounts," Social Protection and Labor Policy and Technical Notes 90348, The World Bank.
    10. Robalino, David & Margolis, David & Rother, Friederike & Newhouse, David & Lundberg, Mattias, 2013. "Youth employment : a human development agenda for the next decade," Social Protection and Labor Policy and Technical Notes 83925, The World Bank.
    11. Filali Adib, Fatima-Zohra & Driouchi, Ahmed & Achehboune, Amale, 2013. "Education Attainment, Further Female Participation & Feminization of Labor Markets in Arab Countries," MPRA Paper 48516, University Library of Munich, Germany.
    12. Arias, Javier & Artuc, Erhan & Lederman, Daniel & Rojas, Diego, 2013. "Trade, informal employment and labor adjustment costs," Policy Research Working Paper Series 6614, The World Bank.
    13. Dorfman, Mark & Palacios, Robert, 2012. "World Bank support for pensions and social security," Social Protection and Labor Policy and Technical Notes 70925, The World Bank.
    14. Artuc, Erhan & Lederman, Daniel & Rojas, Diego, 2015. "The rise of China and labor market adjustments in Latin America," Policy Research Working Paper Series 7155, The World Bank.

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