evolution of the Egyptian labor market over the past years, the literature tends to address these questions from a cross-sectional perspective, thus falling short on tracking individual trajectories between survey rounds. Tansel and Ozdemir (2019) is the only paper thus far using transition matrices to study the labor market in Egypt, which provides us with a methodological guide, as well as an understanding of transitions from 2006 to 2012. This paper updates their work with more recent data from 2018 and provides further insights with more disaggregated analyses by education and age groups. Second, our paper provides a cross-country and cross-regional perspective on such transitions by comparing Mexico’s labor market transitions with Egypt’s. Such cross-country or cross-regional perspectives remain wanting in the existing literature, while they are of utmost importance to better understand the functioning of the Egyptian labor market and to assess its relative rigidity with respect to a relevant comparator country.

Our paper relies on the two most recent rounds of the Egypt Labor Market Panel Survey (ELMPS), conducted in 2012 and 2018, and the 2005 round of its Mexican counterpart, _Encuesta Nacional de Ocupación y Empleo_ (ENOE). For an overview of the Egyptian labor market, we use cross-sectional data to summarize individuals’ employment statuses and employment profiles across sectors in both years. To track individual transitions between the two rounds in Egypt, we take advantage of the panel structure of the ELMPS, as well as the detailed information on labor market status, employment, and individual characteristics. We also rely on the panel structure of ENOE to simulate labor market transitions in Mexico over the same time span. Relying on the Mexican data, we observe individual transitions over at most one year in Mexico. To compute transitions commensurable with those in Egypt, we simulate 6-yearly transitions in Mexico with Monte Carlo simulations of repeated discrete-time Markov chains. Next, this paper provides regression analysis of the potential determinants of labor market transitions in Egypt, with a focus on transitions to and from the dominant absorbing labor market states in Egypt for both women and men—public sector employment for both genders, non-participation for women, and informal sector employment for men.

The remainder of this paper is structured as follows. Section 2 describes the data we use for Egypt and Mexico, followed by Section 3 discussing the background and context of the Egyptian labor market. Section 4 describes the methodology employed to compute the transition matrices in Egypt and that to simulate their Mexican counterparts. Section 5 presents the results from Egypt’s transition matrices, puts the Egyptian matrices in context by way of comparing with those of Mexico, and regression analysis output on the determinants of transitions in Egypt. Section 6 presents some concluding remarks.

# **2. Data**

## **2.1 The Egypt Labor Market Panel Survey (ELMPS)**

We use data from the ELMPS (Egypt) and ENOE (Mexico). The ELMPS is a nationally representative survey conducted by the Economic Research Forum (ERF) in collaboration with Egypt’s Central Agency for Mobilization and Statistics (CAPMAS). In this paper, we rely on the 3