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Young Gazelles and Aging Turtles: Understanding the Determinants of Employment Creation in the Labor Market in MENA Countries

Hassan Aly (), Yousef Daoud, Amr Ragab and Ayhab Saad
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Hassan Aly: Nile University

No 1121, Working Papers from Economic Research Forum

Abstract: The Middle East region has suffered from major unemployment problems that constituted a chief determinant for the Arab Spring. Even during its best economic years, “jobless growth” was an issue. Thus, creating employment, in the private sector, is always on the top priority of all governments in the region. However, the success of increasing employment in the private sector requires an understanding of the factors and conditions necessary for private firms to create jobs. This paper tries to tackle this issue by shedding lights on some of determinants of job growth within firms across the region. This study is one of few that used firm-level data from the World Enterprise Surveys (WES), conducted by the World Bank, to analyze the labor market demand in the MENA region. As such, the study applies a two-part strategy: 1) a detailed statistical analysis of characteristics of each firm group, and 2) an econometric estimation using multinomial logit regressions to determine the significant drivers of job growth in each group. We then apply the appropriate robustness checks. One of the major study result indicates that governments would benefit from focusing on supporting new and young firms that are medium to large-sized with existing investments in R&D. The results, also, indicates that investment in R&D or NM is positively related to job creation. Finally, the study encourages new research of more factors that may be contributing to job creation such as labor market regulations; political activeness; access to foreign markets; practice of social responsibility and political corruption.

New Economics Papers: this item is included in nep-ara
Date: 2017, Revised 2017
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