Rethinking Social Insurance in Egypt: An Empirical Study

The focus of this paper is to empirically analyze the social insurance system (SIS) in Egypt. A first aspect is to estimate the determinants of the coverage among wage workers and non-wage workers. The second is to analyze the risk of underreporting insurable wages to the social security administration. To treat the selection bias but also the endogeneity problem of the employment states, i.e. the choice between wage work or non-wage work, a bivariate probit model and a switching probit model are used to jointly estimate the social insurance (SI) coverage probability for wage workers and non-wage workers, separately, with the selection into each of these employment statuses. Results show that older, married, educated workers have more likelihood to be covered, as known in international findings concerning SI or formality. It shows that employment status is indeed correlated with social security coverage. Likewise, we found that acquiring SI coverage is a dynamic process over time for wage workers while time is not as important for non-wage workers. Underreporting insurable wages is negatively correlated with higher education levels and also with the closer the worker gets to retirement.  

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