Labor Market Reforms, Growth, and Unemployment in Labor-Exporting Countries in the Middle East and North Africa

Abstract

Agenor, Nabli, Yousef, and Jensen study the impact of labor market policies on growth and unemployment in labor-exporting countries in the Middle East and North Africa. Their analysis is based on a framework that captures many of the main features of the labor market in these countries. The authors conduct a variety of policy experiments, including a reduction in payroll taxation, cuts in public sector wages and employment, an increase in employment subsidies, a reduction in trade unions' bargaining power, and a composite reform program. Their key message is that to foster broad-based growth and job creation in the region, labor market reforms must not be viewed in isolation but rather as a component of a comprehensive program of structural reforms.

This paper - a product of the Social and Economic Development Group, Middle East and North Africa Region - is part of a larger effort in the region to understand the impact of labor market reforms on growth and unemployment.