Heterogeneity in Informal Salaried Employment: Evidence from the Egyptian Labor Market Survey

SummaryThis paper contributes to the continuing debates on the mechanisms driving labor market informality in developing countries by proposing an innovative way to discriminate between segmented and competitive markets. An empirical analysis is applied to Egyptian paid employment in the highly dynamic context of 1998–2006.The study is based on recent nonparametric methods applied to estimate the model with essential heterogeneity. The model is extended to decomposing the treatment effects into unobserved and observed components.The results show triple heterogeneity of workers on the Egyptian labor market, offering support to both segmented and competitive views on informal labor.