Formal-informal gap in return to schooling and penalty to education-occupation mismatch a comparative study for Egypt, Jordan, and Palestine

Abstract EN

This paper is a comparative study for three labor economies in the Middle East (Egypt, Jordan, and Palestine).

The purpose of this paper is to investigate for differences in return to education between formal and informal types of employment.

The paper investigates the presence of wage penalty to education-occupation mismatch and the differences in wage penalty between formal and informal employment.

Using labor force survey data from the three countries, a hierarchical linear model is estimated in order to test for heterogeneity in wage penalty across occupations.

Results show lower rate of return to education for informal employees.

Moreover, wage penalty to over-education is observed in Egypt and Palestine for informal employees.

A wage penalty to under-education of informal employees is observed only in Egypt.