ERF 26th Annual Conference
Informal Labor and the Expansion of Social Security Programs: Evidence from Jordan and Tunisia
No.
ERF26_235
Publisher
ERF
Date
July, 2020
Topic
J4. Particular Labor Markets
H5. National Government Expenditures and Related Policies
J. Labor and Demographic Economics
Social insurance could reduce incentives to search for jobs when there are generous unemployment benefits and the payroll taxes can provide incentives to operate informally. The non-contributory programs targeted to informal workers can also provide incentives to take informal jobs (Pagés, Rigolini and Robalino, 2013). In this paper we have analyzed the impact of social security programs on informal employment. Two main programs implemented in Jordan in 2010 and in Tunisia in 2004 have been considered. Tunisian reform introduced a new system with the merger of the sickness benefit programs of the various social security schemes into a new unified scheme. The new scheme provides the same benefits to insured and their family. Jordan reform has extended social security coverage to self-employed, micro-enterprise and to women out of labor market. To evaluate the program impact on the informality status of workers, we have used the difference in differences methodology, took into consideration the diversity within the economy (area, sectors, size of company, ...) and considered data from the Jordanian Labor Market Panel Survey (JLMPS) of 2010 and 2016 and Tunisian Labor Market Panel Survey (TLMPS) of 2014. The results suggest a non-significant effect of both reforms on formal employment. Our results highlight that workers are more likely to get out informal employment as they advance in their career.
Research Fellows
Najat El Mekkaoui
Professor of Economics, University Paris-Dauphine
Authors
Zied Chaker
Economist/Statistician, CNAV (French National Pension Fund)