An Econometric Study of Education,Labor Market and Human Development In The State of Kuwait

Abstract

Kuwait’s economy has witnessed a number of up and down swings since the 1970. A remarkable economic boom arising from oil prices upsurge in 1973 and 1979 was followed by sluggish growth in 1980s and 1990s. A heavy reliance on a single exhaustible resource, distorted labor force and population structure, low share of private investment, a strong role of the government in guiding economic activity and substantial outflow of capital due to limited domestic investment opportunities are all examples of market inefficiencies and imbalances. When the labor market is inefficient, the wage rate is unable to perform its mediating role in matching the demand and supply of labor which has a negative impact on resource allocation and economic growth. The objective of this study is to shed light on the working of the labor market through a better understanding of wage determination and its links to human capital (education) in Kuwait. Unfortunately, there are not many studies of wage determination in Kuwait, partly because data availability on wages and earnings is relatively recent and limited. The study found that return to education for the Kuwaitis in the public sector is 9.4 per cent and the return to experience is only 4 per cent. However, for non‐ Kuwaitis, the return to education was 11.7 per cent and the return to experience is only 2.8 per cent. As for the levels of education, completing secondary school education was found to give the highest returns for both Kuwaitis and non Kuwaitis, about 30.4 per cent and 19.9 per cent respectively. Moreover, by gender, Kuwaiti males earn, on the average, more than their female counterpart for all levels of education and experience.

Citation

Nagi El‐Toni, M. (2004), "An Econometric Study of Education,Labor Market and Human Development In The State of Kuwait", Journal of Economic and Administrative Sciences, Vol. 20 No. 1, pp. 24-51. https://doi.org/10.1108/10264116200400002