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Returns to Qualification in Informal Employment: A Study of Urban Youth in Egypt

Jon Frost ()

MPRA Paper from University Library of Munich, Germany

Abstract: Informal employment is a reality for roughly two-thirds of economically active youth in urban Egypt, and it has been argued to be correlated with poverty, poor working conditions, and few opportunities for advancement. This essay analyzes whether informal employment rewards job qualification measures, using survey data from 2006 and a Blinder-Oaxaca wage decomposition. After creating a taxonomy of formal, para-formal, and informal modes of qualification, it is shown that formal public and formal private jobs tend to reward those with formal qualifications, while informal employment tends to reward informal qualification mechanisms. The notion that informal employment does not reward qualification is disputed. Furthermore, there are large wage premia based on formality of employment, region, and gender. The results can be explained by analyzing the formality decision and the qualification decisions of youth. This suggests an alterative explanation for “dualistic” outcomes in youth labor markets.

Keywords: informal employment; youth employment; human capital; developing country labor markets; wage regression (search for similar items in EconPapers)
JEL-codes: J24 J42 O17 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-lab
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