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Who Is Covered and Who Underreports: An Empirical Analysis of Access to Social Insurance on the Egyptian Labor Market

Author

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  • Roushdy, Rania
  • Selwaness, Irène

Abstract

This paper investigates the dynamics and determinants of having access to social insurance coverage on the Egyptian labor market among wage and non-wage workers. The paper explores two issues: the worker- and enterprise- level determinants of having access to social insurance and the risk of underreporting insurable wage to the social security authority. Using data from the Egyptian Labor Market Panel Survey for 1998 and 2006, the likelihood of having access to social insurance coverage is estimated by a probit regression model for all workers, for wage and non-wage workers, separately. Given the potential endogeneity between the type of work and social insurance access, instrumental variable technique is applied. Results show that men, older, married, better educated and white collar highly skilled workers are more likely to be socially insured. Underreporting insurable wages is negatively correlated with education and work experience. High contribution rates requested from both the employer and employee, combined with basing benefits on wages level of the last few years of service, and the weak capacity of law enforcement encourage employers and employees to either not participate in the social insurance system or contribute on amounts that are lower than their actual wage. The paper is one of the few studies that focus on the phenomenon of coverage gap and underreporting salaries to the social security administration.

Suggested Citation

  • Roushdy, Rania & Selwaness, Irène, 2017. "Who Is Covered and Who Underreports: An Empirical Analysis of Access to Social Insurance on the Egyptian Labor Market," GLO Discussion Paper Series 29, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:29
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    References listed on IDEAS

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    1. Bosch, Mariano & Goni, Edwin & Maloney, William, 2007. "The determinants of rising informality in Brazil : Evidence from gross worker flows," Policy Research Working Paper Series 4375, The World Bank.
    2. Bosch, Mariano & Maloney, William F., 2010. "Comparative analysis of labor market dynamics using Markov processes: An application to informality," Labour Economics, Elsevier, vol. 17(4), pages 621-631, August.
    3. Paula Auerbach & María Eugenia Genoni & Carmen Pagés-Serra, 2005. "Social Security Coverage and the Labor Market in Developing Countries," Research Department Publications 4421, Inter-American Development Bank, Research Department.
    4. Carmen Pages & Lucia Madrigal, 2008. "Is Informality a Good Measure of Job Quality? Evidence from Job Satisfaction Data," Research Department Publications 4603, Inter-American Development Bank, Research Department.
    5. Carmen Pages & Lucia Madrigal, 2008. "Is Informality a Good Measure of Job Quality? Evidence from Job Satisfaction Data," Research Department Publications 4603, Inter-American Development Bank, Research Department.
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    Cited by:

    1. 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, The World Bank, number 19905, June.

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    More about this item

    Keywords

    Social Security; Social Insurance; Informality; Endogeneity; Instrumental variables;
    All these keywords.

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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