Political change and informality: Evidence from the Arab Spring

This paper examines informality during the political and economic turmoil that accompanied the Arab Spring revolution in Egypt. The paper focuses on unprotected employment and the extent to which it changed by educational level immediately after the January Uprising of 2011. We find that over time and particularly after the revolution, informal employment has increased for both high- and low-educated workers, albeit through different paths: high-educated workers were more likely to be stuck in informality, while low-educated formal workers were more likely to lose their contracts. The increase in informal employment in the wake of the Arab Spring is more pronounced for the high-educated. The results suggest a high level of rigidity in the Egyptian labour market, even in the wake of the Arab Spring.