Title page
Contents
Abstract 2
I. Introduction 5
II. Labor markets in North Africa: High unemployment and low cyclicality 6
III. Informal Employment and Okun's law 9
A. The Okun's Law Relationship 9
B. Estimation Results 9
C. Potential Determinants of Okun's Coefficients 10
IV. Informal Employment and the Business Cycle 14
A. Countercyclicality of employment informality 14
B. Event Studies of Informal Employment 15
V. Is the pandemic recession different? 21
VI. Conclusion 24
Annex I. Data Sources 26
Annex II. List of Countries by Informality Grouping 27
Annex III. Econometric Results 28
Annex IV. Correlation Analysis 33
References 34
Table 1. Determinants of Okun's Coefficient-Gap Specification: Global Sample 12
Table 2. Labor Market Responses over the Business Cycle 19
Table 3. Sectoral Employment Responses over the Business Cycle 20
Figure 1. Key Labor Market Characteristics across North Africa 8
Figure 2. Okun's Law Coefficients from Panel Regressions 10
Figure 3. Factors That Influence Okun's Coefficient 13
Figure 4. Response of Employment Informality to Cyclical Output 14
Figure 5. The Labor Market during Downswings and Upswings 17
Figure 6. Sectoral Employment during Downswings and Upswings 18
Figure 7. The Labor Market during Downswings and the COVID-19 Recession 22
Figure 8. The Labor Market during Upswings and the Post-Pandemic Recovery 23
Annex Tables
Table A.1. Data sources 26
Table A.2. List of Countries by Informality Grouping 27
Table A.3. Regressions of Okun's law - gap specification 28
Table A.4. Panel Regression-Gap Specification: Global Sample with Interaction Terms 28
Table A.5. Informality Response to Output Fluctuations 29
Table A.6. Okun's law coefficients: unemployment - gap specification 30
Table A.7. Correlation Between Output and Employment - Country Groupings 33