This study investigates the effects of drought on informal employment in rural areas of Zanjan Province between 2006 and 2021. Adopting a quantitative approach and employing pseudo-panel data, the research analyzes the economic, social, and environmental factors shaping informal employment. The statistical population comprised employed individuals aged 15 to 64 in rural households with at least one member engaged in informal work without social insurance coverage. A sample of 1,400 households was selected using random cluster sampling across mountainous, plain, and foothill/valley regions. Data sources included the Household Expenditure and Income Survey of the Statistical Center of Iran, reports from the Agricultural Jihad Organization and the Governor’s Office, and meteorological records from Zanjan. Informal employment was treated as a binary dependent variable (1 = informal, 0 = formal), while drought—the main independent variable—was measured using the Standardized Precipitation Evapotranspiration Index (SPEI). Logistic regression and the Baron and Kenny mediation framework were applied to assess the effects of drought, as well as the interaction of gender, education, and migration. Results revealed that 68% of the employed rural population were engaged in informal work. Model estimates indicated that drought (β = 0.55, p < 0.001), migration (β = 0.65, p < 0.01), and engagement in agricultural or livestock activities (β = 0.45, p < 0.05) significantly increased the likelihood of informal employment. In contrast, household income (β = –0.0003, p < 0.05), education (β = –0.14, p < 0.01), and infrastructure development (β = –0.18, p < 0.01) reduced this likelihood. These findings highlight the need for integrated policy interventions emphasizing water resource management, educational investment, and rural infrastructure development to mitigate vulnerability to drought, reduce dependence on informal employment, and support sustainable livelihoods.