Arbeitspapier
Informality, Public Employment and Employment Protection in Developing Countries
This paper proposes an equilibrium matching labor market model for developing countries where the interaction between public, formal and informal sectors is considered. Theoretical analysis shows that labor markets' liberalization reforms can be evicted by shifts in public employment. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand their labor market outcomes. Wage offers to public sector employees increase the outside option value of workers during their bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job to access more attractive and stable jobs. The public sector therefore acts as an additional tax imposed on private firms. Using workers flows data from Egypt, we show that labor markets' liberalization plays against informal employment by increasing formal jobs' profitability, but is evicted by the increase of public sector wages observed at the same time.
- Language
-
Englisch
- Bibliographic citation
-
Series: IRENE Working Paper ; No. 16-09
- Classification
-
Wirtschaft
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Informal Economy; Underground Economy
Mobility, Unemployment, Vacancies, and Immigrant Workers: General
Unemployment: Models, Duration, Incidence, and Job Search
Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- Subject
-
Job search
Informality
Public Sector
Egypt
Unemployment
Wages
Policy Interventions
- Event
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Geistige Schöpfung
- (who)
-
Langot, Francois
Yassin, Shaimaa
- Event
-
Veröffentlichung
- (who)
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University of Neuchâtel, Institute of Economic Research (IRENE)
- (where)
-
Neuchâtel
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Langot, Francois
- Yassin, Shaimaa
- University of Neuchâtel, Institute of Economic Research (IRENE)
Time of origin
- 2016
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