Working Paper- Reforming Employment Protection in Egypt: An Evaluation Based on Transition Models with Measurement Errors

Source: Economic Research Forum
Author(s): François Langot, Shaimaa Yassin

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Do reforms introducing more flexibility in developing countries’ labor markets reduce unemployment? This paper proposes to evaluate the new Egyptian labor market law, which was introduced in 2003, aiming to enhance the flexibility of the hiring and the firing processes. The Egypt labor market panel surveys (ELMPS 2006 and ELMPS 2012) are used to measure the impact of this reform on the dynamics of separation and job finding rates, and to quantify their contributions to overall unemployment variability. Using synthetic panel data created from the retrospective accounts of the 2006 and 2012 cross-sections, and by overlapping the two surveys, we estimate annual and semi-annual transition probabilities of workers among employment, unemployment and inactivity labor market states…

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