The informal economy represents a significant share of output and employment across North Africa. Informal activities account for about one third of GDP, on average, and informal employment accounts for nearly two thirds of total employment (see IMF, 2022)2 . This is due to various factors, including flexibility, taxation, or regulatory impediments, that incentivize firms and workers to remain in the informal sector (Maloney 2004, Loayza, Oviedo, and Servén 2006). In addition, the informal sector constitutes the main source of income in less developed economies with large agricultural sectors and high shares of unskilled workers (World Bank, 2019).While there is a rich literature on the determinants of informality and its impact on growth and welfare, there are fewer studies on the link between informality and the business cycle (see World Bank 2019). Some studies show that informal employment tends to rise during economic downturns, suggesting that it provides a buffer for workers who lose their formal jobs, especially in the absence of strong safety nets (Loayza and Rigolini 2011; Ohnsorge and Yu 2021). Other studies, however, mainly using indicators of output informality, find informality to behave procyclically (see, for example, Ferreira-Tiryaki 2008 and Ohnsorge and Yu 2021).