Comparing the employment-output elasticities of migrants and nationals: the case of the Gulf Cooperation Council

Alberto Behar ()

Applied Economics Letters, 2017, vol. 24, issue 10, 703-707

Abstract: Many countries have large or increasing migrant populations. We estimate the elasticity of private-sector employment to nonoil GDP for nationals and migrants using a Seemingly Unrelated Error Correction (SUREC) model. We use data from the Gulf Cooperation Council (GCC) countries, which have a particularly large share of foreign workers. Our results indicate that the employment response is statistically significantly lower for nationals, who have an estimated short-run elasticity of only 0.15 and a long-run response of 0.7, than for migrants, where the short- and long-run elasticities are 0.35 and almost unity. Lower elasticities could signal higher labour market adjustment costs. In the context of low oil prices, forecasts imply a significant jobs shortfall for nationals in the coming years.

Date: 2017
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DOI: 10.1080/13504851.2016.1223806

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