Micro-Determinants of Informal Employment in the Middle East and North Africa Region

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S P D I S C U S S I O N PA P E R

Summary Findings 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 sectors and 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. HUMAN DEVELOPMENT NETWORK

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Social Protection Discussion Papers are published to communicate the results of The World Bank’s work to the development community with the least possible delay. The typescript manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. The findings, interpretations, and conclusions expressed herein are those of the author(s), and do not necessarily reflect the views of the International Bank for Reconstruction and Development / The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. For more, please contact the Social Protection Advisory Service, The World Bank, 1818 H Street, N.W., Room G7-703, Washington, D.C. 20433 USA. Telephone: (202) 458-5267, Fax: (202) 614-0471, E-mail: socialprotection@worldbank.org or visit the Social Protection website at www.worldbank.org/sp.

Micro-Determinants of Informal Employment in The Middle East and North Africa Region Diego F. Angel-Urdinola Kimie Tanabe

January 2012

NO. 1201


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Micro-Determinants of Informal Employment in the Middle East and North Africa Region by World Bank Group - Social Protection & Jobs - Issuu