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DIRECTIONS IN DEVELOPMENT
Human Development

Striving for Better Jobs
The Challenge of Informality in the Middle East and North Africa

Roberta Gatti, Diego F. Angel-Urdinola, Joana Silva, and Andrs Bodor

2014 International Bank for Reconstruction and Development The World Bank - photo 1

2014 International Bank for Reconstruction and Development / The World Bank

1818 H Street NW, Washington DC 20433

Telephone: 202-473-1000; Internet: www.worldbank.org

Some rights reserved

1 2 3 4 17 16 15 14

This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions:

AttributionPlease cite the work as follows: Gatti, Roberta, Diego F. Angel-Urdinola, Joana Silva, and Andrs Bodor. 2014. Striving for Better Jobs: The Challenge of Informality in the Middle East and North Africa. Directions in Development. Washington, DC: World Bank. doi:10.1596/978-0-8213-9535-6. License: Creative Commons Attribution CC BY 3.0 IGO

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All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: .

ISBN (paper): 978-0-8213-9535-6

ISBN (electronic): 978-0-8213-9536-3

DOI: 10.1596/978-0-8213-9535-6

Cover photo: Toufik Berramdane. Used with permission. Further permission required for reuse.

Cover design: Naylor Design

Library of Congress Cataloging-in-Publication Data

Striving for better jobs : the challenge of informality in the Middle East and North Africa /

Roberta Gatti... [et al.].

p. cm. (Directions in development)

Includes bibliographical references.

ISBN 978-0-8213-9535-6 (alk. paper) ISBN 978-0-8213-9536-3

1. Informal sector (Economics)Africa, North. 2. Informal sector (Economics)Middle East.

3. Labor marketAfrica, North. 4. Labor marketMiddle East. I. Gatti, Roberta.

II. World Bank.

HD2346.A56S77 2012

331dc23

2012011909

Contents

Preface

Acknowledgments

Contributors

Abbreviations

Overview

Background

Understanding Informality

Informality in MENA: Levels and Trends

Who Are Informal Workers?

Informality among Firms

Informality in MENA: Exclusion or Choice?

Barriers to Coverage and Policy Options

Notes

References

Chapter 1

How Large Is Informality and Why Do We Care?

What Is Informality?

How to Measure Informality

Why Does Informality Matter?

Informality in MENA

What Causes Informality?

Conclusions

Annex

Notes

References

Chapter 2

Profile and Micro-Determinants of Informality

Introduction

Macroeconomic Context

Informality Profile

Determinants of Informality

Conclusions

Annex

Notes

References

Chapter 3

Informality and the Firm

Introduction

Description of Informality among Firms

Main Costs and Benefits of Informality for Firms

Stylized Facts on Informality among Firms in MENA

Conclusions

Annex

Notes

References

Chapter 4

Informality: Choice or Exclusion?

Introduction

Informality and Wages

Job (Im) Mobility

What Are Informal Jobs Like?

Self-Employment: A Choice?

How Much Are Workers Willing to Contribute to Social Security?

Networks and Intergenerational Persistence

Conclusions

Annex

Notes

References

Chapter 5

Barriers to Coverage and Policy Options

Part 1. Addressing Institutional Barriers and the Low Productivity Trap

Part 2. Extending Social Insurance Coverage

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