Labor and Human Capital in the Middle East: Studies of Markets and Household Behavior

Citation

Tansel, A. (2003), "Labor and Human Capital in the Middle East: Studies of Markets and Household Behavior", Career Development International, Vol. 8 No. 7, pp. 380-381. https://doi.org/10.1108/13620430310505331

Most of the articles in this book were presented at the annual conference of the Economic Research Forum for the Arab countries, Iran and Turkey, in September 1996 held in Kuwait. The book has two parts. Part I surveys the performance of the labour markets for the Middle East and North Africa (MENA) region as a whole.

There are several major features of the labour markets in the MENA region as explored in the chapters in Part I. These features can be summarized as follows. First of all, high fertility rates of the recent past have led to high rates of population growth. As a result, most MENA countries experience high growth rates of the labour force which is expected to continue in the coming decades. This exacerbates the unemployment problems especially for the new entrants in the labour market. The proportion of the unemployed who are first time job‐seekers is very high in the region. A low level of education which is lower than that of the comparable middle income countries is another major feature of the MENA labour markets. Illiteracy rate especially of women is very high in several MENA countries. The gender differences in human capital in the region is one of the highest in the world. The third major feature is the low rates of labour force participation of women. It is an average of 10 percent for the region. In most MENA countries women’s employment is mainly among the educated in the public sector. There are measurement and definitional problems in women’s work. The fourth major feature of the region’s labour markets is the existance of a large informal sector. Urban informal sector employment plays a major role in the labour absorption and accounts for a sizable proportion of the non‐agricultural employment. The size of the formal private sector is small in most countries of the region. The fifth major feature of the MENA labour markets is the large public sector employment and the significant role of the state as a regulator in the labour market. It is larger than in most developing and developed countries. The growth of the public sector is linked to oil revenues in the oil exporting countries. The public sector expanded during the oil boom but the contraction was not easy during the oil bust. Many Arab governments used public employment as a means to redistribute income. In several Arab countries, the public sector was the employer of the last resort for the educated. For instance Egypt had a program of job guarantee for the educated. This program was abolished in the 1990s. The sixth major feature of the MENA labour markets is that the markets are rigid and segmented. Segmentation may be the result of the employment policies of the government. There is evidence that in some countries the segmentation of the labour market restricted the movement of workers between the traded and non‐traded sectors. This has been the cause of the difficult and costly adjustment to lower foreign exchange earnings.

Above discussed and other features of the labour markets in the MENA region are discussed and elaborated on in the first four chapters of Part I. Shaban et al. in the first chapter concentrate on the Arab countries. Tabatabai and Salehi‐Isfahani in the second chapter concentrate on Iran. Said in the third chapter discusses the role of the public sector in the labour markets. Karshenan in chapter four shows that a low labour force participation of women prevents a further decline in wages and hinders success of the structural adjustment and export‐oriented development programs. He suggests that in order to attain wage competitiveness in the MENA region, greater integration of women in the labour market, greater education and training of women and the transformation of patriarchal family structures are essential.

Part II includes microeconometric studies using individual level data from the region in such areas as fertilitiy, human capital, efficiency of the labour markets and returns to schooling. The six chapters in this part use individual level data. Recently, increased availability of the individual level data and the improvements in the computer technology involving greater speed and better access has led to increasing numbers of empirical studies of individual or household behavior. The individual level data used in this part are mostly collected by statistical agents and were made available to the researchers only recently.

Chapters five and six explore the issues in relation to demand for schooling. Chapter five by S. Wahba explores the effects of temporary labour migration in agricultural households on gender differences in primary and secondary education. Temporary migration by one or more household members may be a way of increasing household income. The effect of such increased earnings on a household’s decision on investment in education is examined by using data from rural Egypt where the gender gap in education is very high. Chapter six by Salehi‐Isfahani estimates reduced form equations of the demand for schooling of boys and girls in Iran. Isfahani determines the extent to which education and income of parents have an asymmetric effect on boys’ and girls’ schooling. The effect of household background among rural and urban households is compared.

Chapter seven is by Zauari‐Bouattour and Siala on the quality‐quantity relationship of children in Tunisia. During the last decades Tunisia was able to significantly reduce fertility and at the same time made significant progress in the educational attainment of its population. The authors examine the determinants of fertility and child schooling. Their results confirm the trade off between quality and quantity of children especially in urban areas. Chapter eight is by Assaad and Tunali on the wage formation in the construction sector in Egypt. The authors try to sort out the institutional and market determinants of wages and isolate wage differences associated with job instability prevalent in the private construction sector. The authors conclude that informal workers may be receiving wage premia that compensate them for the job instability they experience.

Chapters nine and ten are concerned with returns to schooling. Chapter nine by myself is on wage equations and returns to schooling by gender in Turkey. The wage equations corrected for sector selection are estimated for self‐employed and wage‐employed. Private returns to schooling are provided for self‐employed and wage‐employed by gender. Highest returns are found for the university level explaining the excess demand for this level of education. No striking differentials in returns to schooling between men and women wage‐earners were observed. Chapter ten by J. Wahba is on returns to education and regional earnings differential in Egypt. She advances the geographical segmentation of the Egyptian labour market as a reason for the differential rate of return among regions. Similar to the case of Turkey highest returns were found for university and higher schooling.

This book represents an important contribution to the literature on labour market in MENA. The second part of the book provides some noteworthy results. The impressive data sets which were previously unavailable along with careful and comprehensive analysis allows the authors to uncover new and interesting results. The book will be useful for those interested in the issues related to the labour markets in the MENA region. It will also serve as a benchmark for those researching the subsequent developments. Practitioners will also benefit from this book due to its policy related implications.