Abstract
This paper examines the links and interactions between the formal and informal employment growth as well as their determinants in 264 Tunisian delegations from 1996 to 2013. The empirical analysis based on non-spatial and spatial simultaneous equations models reveals that an increase in the informal employment growth in industry is positively associated with an increase in the formal employment at the same delegation, and vice versa. For the construction activities, the results show that the formal and informal sectors are opposite. With respect to agglomeration externalities, we find positive effects of local competition on employment growth for both formal and informal sectors. Furthermore, we find that formal employment is higher in delegations with higher average monthly wage and high levels of net migration.
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