Transitions across labor market states including formal/informal division in Egypt


REVIEW OF DEVELOPMENT ECONOMICS, vol.23, no.4, pp.1674-1695, 2019 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 23 Issue: 4
  • Publication Date: 2019
  • Doi Number: 10.1111/rode.12620
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.1674-1695
  • Keywords: labor market transitions, formal and informal sectors, Markov processes, multinomial logit model, Egypt, MOBILITY, SEGMENTATION, INFORMALITY
  • Ankara Haci Bayram Veli University Affiliated: Yes


This study examines the worker transitions across labor market states including formal/informal division using panel data of 2006 to 2012 from Egypt. We generate a broad set of facts about labor market dynamics in Egypt. We first develop transition probabilities by gender across different labor market states including formal/informal sectors utilizing Markov transition processes. Government employment is the most persistent labor market state for both men and women and the out of labor force is the second most persistent labor market state for women. Unemployment is the most mobile labor market state. Informal private wage work and self-employed-agriculture are also relatively mobile labor market states. We next identify the effects of individual, household and job characteristics on different mobility patterns by estimating multinomial logit models. We find that gender, age, education, experience, and several sectors of economic activity are associated with the transition probabilities between the labor market states considered such as formal wage, informal wage, self-employment, unemployment, government employment, and out of labor market. Education, in particular, university degree or above is noted to play a vital role in the probability of transitions across several labor market states.