Nabi, Mahmoud Sami and Suliman, Mohamed Osman (2008): Unemployment and Labor Market Institutions: Theory and Evidence from the GCC. Published in: Arab Planning Institute Working Paper , Vol. 806, (2008)
Download (463kB) | Preview
The theoretical model delves into the relationship between labor market institutions and unemployment by proving two propositions: (1) allowing informal activity bolsters job creation, and (2) if the institutional environment is initially, sufficiently, weak, then mitigating it will lower unemployment. Simulating the model with the GCC’s unemployment for the period 1990-2007 allows us to decipher the validity of the model. The institutional environment is represented in this simulation by social insurance which is captured through oil prices. Hence, an increase in oil prices is assumed to lead to higher social insurance and, therefore ,to higher cost of hiring labour . The parameters are selected with the objective of minimizing the error gap between the effective unemployment rate and the simulated unemployment rate . The effective unemployment rate is constructed as a weighted average of the unemployment rate of nationals and non-nationals. The weights are the shares of national and non-national labour-force in the GCC countries. Expositional simulations verified the second proposition. Thus, improving labor market institutions, that are initially weak may discernibly alleviate unemployment problems in the GCC.
|Item Type:||MPRA Paper|
|Original Title:||Unemployment and Labor Market Institutions: Theory and Evidence from the GCC|
|Keywords:||Unemployment; institutions; GCC|
|Subjects:||J - Labor and Demographic Economics > J4 - Particular Labor Markets
J - Labor and Demographic Economics > J0 - General
|Depositing User:||Mahmoud Sami NABI|
|Date Deposited:||02. Dec 2008 06:25|
|Last Modified:||13. Feb 2013 23:17|
Albuainain, Reem M., Unemployment Rate in the United Arab Emirates: The Case of Abu Dhabi, Economic Research Forum, Working Paper 0404, 2004.
Ali, A.A., On the Relationship between Education , the Labor Market and the Measurement of Returns to Human Capital, in Al-Kawaz, Enhancing link between Education and Labor Market in the Arab Countries, Ch.2, 2002.
Al-Khouli, Sayid F. Ahmed, Labor Shortages, Migration and Segmentation: The Case of Saudi Labour Market 2007; http://inmgard-conix-shifting.de/fileadmin/user-upload/pdf/roundtable07/mahdi.pdf.
Arellano M, Bond S. Some Test of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economic Studies 1991; 58; 277-297.
Bartram, D.V., Foreign Workers in Israel: History and Theory, International Migration Review 1998; 32,2;303-325.
Borjas, George, The Economics of Immigration ,Journal of Economic Literature 1994;32.
Central Department Of Statistics CDs, Bulletin of Labor Force, 2000.
Hansen , L.P. and K.J. Singleton, Generalized Instrumental Variable Estimation of Nonlinear Rational Expectation Models, Econometrica, 50; 1269-1286.
Helpman, E. and O. Itskhoki (2007), “Labor Market Rigidities, Trade and unemployment,” NBER Working Paper 13365.
Hiebert, Daniel, Local Geographies of Labor Market Segmentation: Motreal, Toronto, and Vancouver, Economic Geography, 1991;75,4;339-369.
Holtz-Eaken D, Newey W, Rosen H. Estimating Vector Autoregressions with Panel Data. Econometrica 1988;56,6
Montagna, C. (1995), “Monopolistic Competition with Firm-Specific Costs,” Oxford Economic Papers, New Series, Vol. 47, No. 2., pp. 318-328.
Nair-Reichert U, Weinhold D. Causality Tests for Cross-Country Panels: New Look at FDI and Economic Growth in Developing Countries. Oxford Bulletin of Economics and Statistics 2001;63,2; 153-71
Piore, Michal J., Birds of Passage : Migrant Labor and Industrial Societies, 1979, Cambridge University Press, London.
Said, M, Public Sector Employment and Labor Market in the Arab Countries, in Djavad Salehi-Ishfahani, Labor and Human Capital in the Middle East , Ithaca Press in Association with the Economic Research Forum, 2001, Cairo.
Stole, L. A. and J. Zwiebel (1996), “ Intra-Firm Bargaining Under Non- Binding Contracts,” Review of Economic Studies 63,pp.375-410
Zind, Richard G, Characteristics and Gaps in the GCC Labor Market, in Al-Kawaz, Enhancing link between Education and Labor Market in the Arab Countries, Ch.4, 2002.