Labor market segmentation and occupational mobility in Algeria: Repeated cross‐sectional and longitudinal analyses (2007 to 2012)

• DOI: http://doi.org/10.1111/rode.12519
• Author: Youghourta Bellache,Philippe Adair
• Date: 01 November 2018
• Published date: 01 November 2018

REGULAR ARTICLE

Labor market segmentation and occupational

mobility in Algeria: Repeated cross-sectional and

longitudinal analyses (2007 to 2012)

Philippe Adair

1

|

Youghourta Bellache

2

1

University Paris-Est Cr

eteil, Cr

eteil,

France

2

University Abderrahmane Mira, Bejaia,

Algeria

Correspondence

Philippe Adair, Faculty of Economics and

Management, ERUDITE, University

Paris-Est Cr

eteil, 61 avenue du G

en

eral

de Gaulle, Cr

eteil, 94000, France.

Email: adair@u-pec.fr

Abstract

The paper identifies the determinants and the patterns of

occupational mobility across the formal/informal employ-

ment divide as well as within the informal sector. Cross-

sectional analyses are applied to two samples (1,252 and

2,026 individuals) from two representative household sur-

veys conducted in 2007 and 2012 in Bejaia, an east-cen-

tral region of Algeria. In the first place, using a Mincer

earnings function shows there is a substantial wage gap

regarding the formal/informal wage employment divide.

However, human capital theory applies to formal employ-

ees rather than to informal ones. Hence, labor market seg-

mentation is not reducible to earnings functions. In the

second place, a multinomial logit model captures the

determinants of occupational mobility, which depend on

the characteristics of individuals: age, gender, marital sta-

tus, and human capital. Finally, the paper explores from a

longitudinal perspective a cohort of 445 individuals both

surveyed in 2007 and 2012. The aforementioned determi-

nants explain the patterns of occupational mobility of

active individuals who experience a change that improves

or deteriorates their job position, while shifting in both

directions across the formal and the informal sector and

within the informal sector.

DOI: 10.1111/rode.12519

Rev Dev Econ. 2018;22:1765–1783. wileyonlinelibrary.com/journal/rode ©2018 John Wiley & Sons Ltd

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INTRODUCTION

The growth of informal employment during the 2000s is a structural component of the labor mar-

ket in developing countries (Jutting & Laiglesia, 2009). For most countries of the Middle East and

North Africa (MENA) region, including Algeria, such growth occurs in the context of weak private

sector job creation (Elbadawi & Loayza, 2008). It results from both a large increase in the working

age population and the rising participation of women in the labor market.

Informal employment in Algeria has been rising significantly (Charmes, 2009; Charmes &

Remaoun, 2014) since the process of economic liberalization in the 1990s, and has fueled the for-

mal/informal segmentation of the labor market.

Following the definition from the International Labour Organization (ILO, 2013), the informal

sector includes self-employed workers, whereas informal employment adds employees within the

formal sector. A formal self-employed is registered with the Non-Salaried Social Insurance Fund

(CASNOS) and pays taxes, whereas an informal self-employed is not registered and does not pay

taxes. A formal employee is registered with the National Social Insurance Fund (CNAS), whereas

an informal employee is an unprotected worker who is not registered.

A few studies focus on the quantitative assessment of informal employment in Algeria (see

Adair & Bellache, 2008). However, they fail to capture the factors explaining the access to the

informal sector and the determinants of earnings that drive the behavior of individuals (Bellache,

Adair, & Bouznit, 2014) as well as public employment policies (Adair & Bellache, 2009; Souag,

Adair, & Hammouda, 2018).

So far, no national surveys have addressed the issue of informal employment in Algeria. The

annual labor force survey of the National Statistics Office (ONS) provides aggregated data con-

cerning informal employment, but the individual characteristics of informal workers prove unavail-

able. Hence, we designed two representative surveys in the region of Bejaia in Algeria: 2007 (522

households) and 2012 (1,016 households). Thanks to a multinomial logistic model, we highl ight

the determinants of access to the labor market for two samples of 1,252 and 2,026 individuals

from the two mentioned surveys. To our best knowledge, this is the first repeated cross-sectional

analysis in Algeria. In addition, it also includes a subsample of 445 individuals who were surveyed

twice in 2007 and 2012. This enables an exploratory cohort analysis that sheds some light upon

mobility patterns within and between labor market segments. This is the very first longitudinal sur-

vey ever made in Algeria. It is worth mentioning that employment surveys in Ukraine (Nezhy-

venko & Adair, 2017; Pag

es & Stampini, 2007) and Russia (Najman & Pailh

e, 2001) use rotative

samples, instead of cohorts addressing the same individuals.

We address three issues. First, the main reason why (Algerian) active people wish to change

their job positions is to improve their income; being a formal employee is mostly preferred, owing

to the advantages of an official job position vs an informal one. Hence, we use cross-section analy-

sis to examine wage differentials regarding employees in the first survey (2007). Seco nd, what are

the options of these people in terms of mobility, with respect to their characteristics? We model

the labor market status of the various categories of active people, using cross-section analysis upon

each survey (2007 and 2012). Third, we use the longitudinal data to address the issue of mobility

patterns in both upward and downward directions: who are the mobile/nonmobile active people

and how many are they?

Section 2 outlines the theoretical framework of workforce mobility within major models in

developing countries. Section 3 examines the trends and main characteristics of nonagricultural

informal employment in Algeria according to aggregated data from annual national surveys. Sec-

tion 4 presents the sampling and descriptive statistics of both representative surveys. Section 5 is

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ADAIR AND BELLACHE