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Determinants of Transitions across Formal/Informal Sectors in Egypt

Aysıt Tansel () and Zeynel Ozdemir

No 1501, ERC Working Papers from ERC - Economic Research Center, Middle East Technical 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.

Keywords: Labor market dynamics; informality; Markov processes; multinomial logit; Egypt. (search for similar items in EconPapers)
JEL-codes: J21 J24 J40 J63 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara and nep-iue
Date: 2015-01, Revised 2015-01
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http://erc.metu.edu.tr/en/system/files/menu/series15/1501.pdf First version, 2015 (application/pdf)

Related works:
Working Paper: Determinants of Transitions across Formal / Informal Sectors in Egypt (2015) Downloads
Working Paper: Determinants of Transitions across Formal/Informal Sectors in Egypt (2015) Downloads
Working Paper: Determinant of Transitions Across Formal/Informal Sectors in Egypt (2014) Downloads
Working Paper: Determinants of Transitions across Formal/Informal sectors in Egypt (2014) Downloads
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