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The linkages between formal and informal employment growth in Tunisia: a spatial simultaneous equations approach

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Abstract

This paper examines the links and interactions between the formal and informal employment growth as well as their determinants in 264 Tunisian delegations from 1996 to 2013. The empirical analysis based on non-spatial and spatial simultaneous equations models reveals that an increase in the informal employment growth in industry is positively associated with an increase in the formal employment at the same delegation, and vice versa. For the construction activities, the results show that the formal and informal sectors are opposite. With respect to agglomeration externalities, we find positive effects of local competition on employment growth for both formal and informal sectors. Furthermore, we find that formal employment is higher in delegations with higher average monthly wage and high levels of net migration.

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Notes

  1. Répertoire National des Entreprises.

  2. It was about 5 employees for Panama, 6 for Brazil and Tunisia, 10 for the United Republic of Tanzania, Turkey and India, and 11 for Ethiopia and Mali. Measuring the informal sector has been the subject of a special issue in the Review of Income and Wealth, especially the final three papers of Kulshreshtha (2011), Kolli (2011) and Joshi et al. (2011).

  3. Another relevant source of informal activity in Tunisia is the Labor Force Survey (LFS). The LFS covers all employment, both registered (formal) and non-registered (informal). However, we do not have access to those surveys for a long period of time [see Rijkers et al. (2014) for a comparison between LFS surveys and RNE census].

  4. The word ‘activity’ is used here to refer to the four economic activities, while the word ‘sector’ is used to distinguish the situation in each activity (formal from informal).

  5. General Direction of Local Authorities (Ministry of Interior).

  6. As a good robustness check, we have re-estimated all models before the Tunisian revolution (from 1996 to 2010), the results are very similar to the previous results (those results are available upon request).

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  1. High Institute of Management of Sousse, 763, Street of Abdelaziz El Behi, 4000, Sousse, Tunisia

    Mohamed Amara

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  1. Mohamed Amara
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Correspondence to Mohamed Amara.

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Amara, M. The linkages between formal and informal employment growth in Tunisia: a spatial simultaneous equations approach. Ann Reg Sci 56, 203–227 (2016). https://doi.org/10.1007/s00168-015-0731-8

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