Comparing the Employment-Output Elasticities of Expatriates and Nationals in the Gulf Cooperation Council

August 18, 2015

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Alberto Behar. Comparing the Employment-Output Elasticities of Expatriates and Nationals in the Gulf Cooperation Council, (USA: International Monetary Fund, 2015) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We estimate the elasticity of private-sector employment to non-oil GDP in the Gulf Cooperation Council (GCC) for GCC nationals and expatriates using a Seemingly Unrelated Error Correction (SUREC) model. Our results indicate that the employment response is lower for nationals, who have an estimated short-run elasticity of only 0.15 and a long-run response of 0.7 or less. The elasticity is almost unity for expatriates in the long run and 0.35 in the short run. We interpret low elasticities as indirect evidence of labor market adjustment costs, which could include hiring and firing rigidities, skills mismatches, and reluctance to accept private sector jobs. Forecasts suggest that, absent measures to reduce adjustment costs, the private sector will only be able to absorb a small portion of nationals entering the labor force.

Subject: Economic sectors, Employment, Labor, Labor force, Labor markets, Public employment, Public sector

Keywords: East Africa, Employment, Employment Elasticities, Employment elasticity, Employment growth, Employment projection, Employment response, Employment rigidity, Employment-growth relationship, GCC, GCC aggregate, GCC country, GCC elasticity, GCC employment, GCC labor market structure, Global, Growth forecast, Gulf Cooperation Council, Inclusive Growth, Labor force, Labor market, Labor Market Adjustment Costs, Labor markets, Middle East, Middle East and Central Asia, North Africa, Public employment, Public sector, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/191
Stock No:

WPIEA2015191
ISBN:

9781513573885
ISSN:

1018-5941

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