This result stands in stark contrast to what we empirically observe in Egypt, where only a small proportion of individuals have left their original sectors. One should note that since the transition is observed only at the two ends of a six-year period, it is entirely possible for individuals to have moved to another (or several other) different sectors, only to move back to the original starting point. However, existing research instead points to workers not changing jobs at all as primary reason for this phenomenon (Yassine 2015). As also noted by Amer (2015), job tenures tend to be very long in Egypt.<sup>11</sup> The resulting labor market composition after six years also points to the rigidity of Egypt’s labor market. Figure 9 indicates substantial labor market upgrading among Mexican men, but almost no compositional changes among Egyptian men. In Mexico, only 7% of men remain out of the labor force after six years; the share of men in the private formal sector increases from 36% to 45%, while the corresponding increase in the informal sector goes from 30% to 37%. Whereas among men in Egypt, the only compositional changes come from a small reduction in nonparticipation, which translates into small increases in the shares of employment in the informal and public sectors. However, Mexico’s labor market upgrading does not apply to Mexican women, who fare as poorly as their Egyptian counterparts. Figure 10 shows that neither labor market has led to substantive compositional changes for women over the six-year window of analysis.

# **5.3 Regression Analysis**

Table 1 and Table 2 present results from a linear probability model on employment status and formality-sector transitions. In each column, the sample is restricted to those individuals with the relevant initial status in 2012, and the dependent variable takes the value one if the individual reached the corresponding destination status in 2018. The reference category for the educational dummies is having no formal education qualification.

Table 1 shows the transition regression outputs from the two initial baselines women are most likely to be in, either out of the labor force or employed in the public sector. We find that younger women are more likely to transition from OLF to employment than older women. Aging by one year makes a young woman more likely to enter employment, with the highest likelihood at age 33. We also find that having primary, secondary or post-secondary schooling (relative to having no formal education) reduces the probability of transitioning to employment from OLF for women. Among women, we also find that having post-secondary education is associated with a lower probability of remaining OLF for those already OLF at baseline. Being married at baseline

> 11 We have attempted to explore labor market states’ persistence in further detail in ELMPS, but substantial measurement errors preclude a useful analysis. We tracked individual labor market status in 2012 based on retrospective information provided in the 2018 survey and cross-checked the accuracy of this information based on a sample of panel observations that were also interviewed in 2012. The data analysis revealed significant discrepancies between what individuals report in the current section of the 2012 round and what they report in the retrospective section of the 2018 round. Of those who retrospectively reported in 2018 that they were not employed in 2012, 44% were found to be employed in 2012. On the other hand, of those who retrospectively reported being employed in 2012, 20% were found to be unemployed.

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**Official Use**