IDEAS home Printed from https://ideas.repec.org/a/spt/admaec/v5y2015i4f5_4_4.html
   My bibliography  Save this article

Informality and Poverty: A Causality Dilemma with Application to Egypt

Author

Listed:
  • Hanan Nazier
  • Racha Ramadan

Abstract

This paper analyzed the inverse causality between informality and poverty in Egypt, in addition to the impact of different individual and socio demographic factors affecting both of them. Using the “Egypt Labor Market Panel Survey†(ELMPS) 2012, we studied the impact of individual, socio demographic, household’s and firm characteristics, in addition to regional dummies, on the likelihood of being informal wage worker as well as on the incidence of being poor for male household’s head. Our results came in line with the literature; informality and poverty are concentrated among the less educated and low skilled occupations in rural areas. Moreover, small firms, with limited access to capital market are more likely to offer informal employment. Our findings revealed that informality in Egypt might be a voluntary and supply led form of employment and not a result of being trapped into poverty.

Suggested Citation

  • Hanan Nazier & Racha Ramadan, 2015. "Informality and Poverty: A Causality Dilemma with Application to Egypt," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 5(4), pages 1-4.
    • Handle: RePEc:spt:admaec:v:5:y:2015:i:4:f:5_4_4
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/AMAE%2fVol%205_4_4.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Arias, Omar & Khamis, Melanie, 2008. "Comparative Advantage, Segmentation and Informal Earnings: A Marginal Treatment Effects Approach," IZA Discussion Papers 3916, Institute of Labor Economics (IZA).
    3. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2008. "Is There an Informal Employment Wage Penalty? Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56(3), pages 683-710, April.
    4. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    5. Attia, Sayed Moawad, 2009. "The informal Economy as an engine for poverty reduction and development in Egypt," MPRA Paper 13034, University Library of Munich, Germany, revised 27 Jan 2009.
    6. Huu Chi Nguyen & Christophe J. Nordman & Fran�ois Roubaud, 2013. "Who Suffers the Penalty?: A Panel Data Analysis of Earnings Gaps in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1694-1710, December.
    7. Falco, Paolo & Kerr, Andrew & Rankin, Neil & Sandefur, Justin & Teal, Francis, 2011. "The returns to formality and informality in urban Africa," Labour Economics, Elsevier, vol. 18(S1), pages 23-31.
    8. Olivier Bargain & Prudence Kwenda, 2014. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 63(1), pages 117-153.
    9. Amuedo-Dorantes, Catalina, 2004. "Determinants and Poverty Implications of Informal Sector Work in Chile," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 347-368, January.
    10. Packard, Truman G., 2007. "Do workers in Chile choose informal employment? A dynamic analysis of sector choice," Policy Research Working Paper Series 4232, The World Bank.
    11. Yusuf Soner Baskaya & Timur Hulagu, 2011. "Informal-Formal Worker Wage Gap in Turkey : Evidence From A Semi-Parametric Approach," Working Papers 1115, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    12. Jean-Philippe Karim El Aynaoui, 1997. "Participation, choix occupationnel et gains sur un marché du travail segmenté : une analyse appliquée au cas du Maroc," Documents de travail 18, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    13. Markus Loewe, 2000. "Social Security in Egypt: An Analysis and Agenda for Policy Reform," Working Papers 2024, Economic Research Forum, revised 08 2000.
    14. repec:dau:papers:123456789/4584 is not listed on IDEAS
    15. Adama Zerbo, 2006. "Marché du travail urbain et pauvreté en Afrique subsaharienne : un modèle d’analyse," Documents de travail 129, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    16. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    17. Buehn, Andreas & Schneider, Friedrich, 2009. "Corruption and the Shadow Economy: A Structural Equation Model Approach," IZA Discussion Papers 4182, Institute of Labor Economics (IZA).
    18. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Documents de travail du Centre d'Economie de la Sorbonne 13032, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    19. Mahdī, ʻĀliyah., 2002. "Towards decent work in the informal sector the case of Egypt," ILO Working Papers 993661433402676, International Labour Organization.
    20. Guillermo E. Perry & Omar S. Arias & J. Humberto López & William F. Maloney & Luis Servén, 2006. "Poverty Reduction and Growth : Virtuous and Vicious Circles," World Bank Publications - Books, The World Bank Group, number 6997.
    21. Moser, Caroline O. N., 1978. "Informal sector or petty commodity production: Dualism or dependence in urban development?," World Development, Elsevier, vol. 6(9-10), pages 1041-1064.
    22. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00820783, HAL.
    23. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Post-Print halshs-00820783, HAL.
    24. Pratap, Sangeeta & Quintin, Erwan, 2006. "Are labor markets segmented in developing countries? A semiparametric approach," European Economic Review, Elsevier, vol. 50(7), pages 1817-1841, October.
    25. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Revue d'économie politique, Dalloz, vol. 123(4), pages 623-639.
    26. Caroline Krafft & Ragui Assaad & Hanan Nazier & Racha Ramadan & Atiyeh Vahidmanesh & Sami Zouari, 2019. "Estimating poverty and inequality in the absence of consumption data: an application to the Middle East and North Africa," Middle East Development Journal, Taylor & Francis Journals, vol. 11(1), pages 1-29, January.
    27. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    28. Henley, Andrew & Arabsheibani, G. Reza & Carneiro, Francisco G., 2009. "On Defining and Measuring the Informal Sector: Evidence from Brazil," World Development, Elsevier, vol. 37(5), pages 992-1003, May.
    29. Pradhan, Menno & van Soest, Arthur, 1995. "Formal and informal sector employment in urban areas of Bolivia," Labour Economics, Elsevier, vol. 2(3), pages 275-297, September.
    30. Enste, Dominik & Schneider, Friedrich, 1998. "Increasing Shadow Economies all over the World - Fiction or Reality?," IZA Discussion Papers 26, Institute of Labor Economics (IZA).
    31. 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.
    32. Gong, Xiaodong & van Soest, Arthur, 2002. "Wage differentials and mobility in the urban labour market: a panel data analysis for Mexico," Labour Economics, Elsevier, vol. 9(4), pages 513-529, September.
    33. Sethuraman, S. V.,, 1976. "Urban informal sector : concept, measurement and policy," ILO Working Papers 991667413402676, International Labour Organization.
    34. Denis Cogneau, 2001. "Formation du revenu, segmentation et discrimination sur le marché du travail d'une ville en développement : Antananarivo fin de siècle," Working Papers DT/2001/18, DIAL (Développement, Institutions et Mondialisation).
    35. Blunch, Niels-Hugo & Canagarajah, Sudharshan & Raju, Dhushyanth, 2001. "The informal sector revisited : a synthesis across space and time," Social Protection Discussion Papers and Notes 23308, The World Bank.
    36. Gasparini Leonardo & Leonardo Tornaroli, 2009. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, September.
    37. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Regressions on Panel Data," CEDI Discussion Paper Series 09-06, Centre for Economic Development and Institutions(CEDI), Brunel University.
    38. Francesco Devicienti & Fernando Groisman & Ambra Poggi, 2009. "Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina," Working Papers 146, ECINEQ, Society for the Study of Economic Inequality.
    39. Alia El Mahdi, 2010. "Poverty and Informality: A Restraining or Constructive Relationship?," Working Papers 569, Economic Research Forum, revised 11 Jan 2010.
    40. Kuepie, Mathias & Nordman, Christophe J. & Roubaud, François, 2009. "Education and earnings in urban West Africa," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 491-515, September.
    41. Johannes Jütting & Jante Parlevliet & Theodora Xenogiani, 2008. "Informal Employment Re-loaded," OECD Development Centre Working Papers 266, OECD Publishing.
    42. Angel-Urdinola, Diego F. & Tanabe, Kimie, 2012. "Micro-determinants of informal employment in the Middle East and North Africa region," Social Protection Discussion Papers and Notes 66594, The World Bank.
    43. Loayza, Norman V. & Rigolini, Jamele, 2011. "Informal Employment: Safety Net or Growth Engine?," World Development, Elsevier, vol. 39(9), pages 1503-1515, September.
    44. Pradhan, Menno & van Soest, Arthur, 1995. "Formal and informal sector employment in urban areas of Bolivia," Labour Economics, Elsevier, vol. 2(3), pages 275-297, September.
    45. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
    46. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Loan Vu & Anu Rammohan, 2022. "Is There an Informal Employment Penalty in Food Security? Evidence from Rural Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2923-2947, December.
    2. Carla Canelas, 2019. "Informality and poverty in Ecuador," Small Business Economics, Springer, vol. 53(4), pages 1097-1115, December.
    3. Rodríguez Núñez, Juan Bautista, 2021. "Causalidad Reversa entre Pobreza Monetaria e Informalidad Laboral, evidencia empírica para la República Dominicana año 2010 y 2016 [Reverse Causality between Monetary Poverty and Labor Informality,," MPRA Paper 119159, University Library of Munich, Germany.
    4. Segun Thompson Bolarinwa & Munacinga Simatele, 2023. "Informality and poverty in Africa: Which comes first?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1581-1592, June.
    5. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2020. "Poverty and the shadow economy: The role of governmental institutions," The World Economy, Wiley Blackwell, vol. 43(4), pages 921-947, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality, in: Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154, Emerald Group Publishing Limited.
    2. Aysit Tansel & Halil Ibrahim Keskin & Zeynel Abidin Ozdemir, 2015. "Is There an Informal Employment Wage Penalty in Egypt?," Working Papers 976, Economic Research Forum, revised Dec 2015.
    3. Aysit Tansel & Halil Ibrahim Keskin & Zeynel Abidin Ozdemir, 2015. "Is There An Infırmal Employment Wage Penalty in Egypt?," ERC Working Papers 1508, ERC - Economic Research Center, Middle East Technical University, revised Sep 2015.
    4. Aysit Tansel & Halil Ibrahim Keskin & Zeynel Abidin Ozdemir, 2020. "Is there an informal employment wage penalty in Egypt? Evidence from quantile regression on panel data," Empirical Economics, Springer, vol. 58(6), pages 2949-2979, June.
    5. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality,in: Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154 Emerald Publishing Ltd.
    6. Erik Jonasson, 2011. "Informal Employment and the Role of Regional Governance," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 429-441, August.
    7. Carla Canelas, 2015. "Poverty and informality in Ecuador," WIDER Working Paper Series wp-2015-112, World Institute for Development Economic Research (UNU-WIDER).
    8. Bargain, Olivier & Magejo, Prudence, 2010. "Is Informality Bad? Evidence from Brazil, Mexico and South Africa," IZA Discussion Papers 4711, Institute of Labor Economics (IZA).
    9. Carla Canelas, 2015. "Poverty and informality in Ecuador," WIDER Working Paper Series 112, World Institute for Development Economic Research (UNU-WIDER).
    10. Jacek Liwiński, 2022. "Informal employment and wages in Poland," International Journal of Manpower, Emerald Group Publishing Limited, vol. 44(6), pages 1196-1220, January.
    11. Gustavo Adolfo García, 2010. "Evolución de la informalidad laboral en Colombia: determinantes macro y efectos locales," Archivos de Economía 6449, Departamento Nacional de Planeación.
    12. Carla Canelas, 2019. "Informality and poverty in Ecuador," Small Business Economics, Springer, vol. 53(4), pages 1097-1115, December.
    13. Olivier Bargain & Prudence Kwenda, 2014. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 63(1), pages 117-153.
    14. Mónica Jiménez, 2017. "La calidad del empleo y sus consecuencias para el mercado de trabajo de las medianas y grandes empresas y del sector público de argentina," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 40(79), pages 133-180.
    15. Bargain, Olivier & Etienne, Audrey & Melly, Blaise, 2021. "Informal pay gaps in good and bad times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 693-714.
    16. Henley, Andrew & Arabsheibani, G. Reza & Carneiro, Francisco G., 2009. "On Defining and Measuring the Informal Sector: Evidence from Brazil," World Development, Elsevier, vol. 37(5), pages 992-1003, May.
    17. Paula Herrera-Id�rraga & Enrique L�pez-Bazo & Elisabet Motell�n, 2015. "Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour Market," Journal of Development Studies, Taylor & Francis Journals, vol. 51(12), pages 1683-1701, December.
    18. Christine ABLAZA & Mark WESTERN & Wojtek TOMASZEWSKI, 2021. "Good jobs and bad jobs for Indonesia's informal workers," International Labour Review, International Labour Organization, vol. 160(1), pages 143-168, March.
    19. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Regressions on Panel Data," CEDI Discussion Paper Series 09-06, Centre for Economic Development and Institutions(CEDI), Brunel University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:admaec:v:5:y:2015:i:4:f:5_4_4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.