Employment and Rates of Return to Education in Arab Countries Gender and Public Sector Perspectives - Economic Research Forum (ERF)

Employment and Rates of Return to Education in Arab Countries Gender and Public Sector Perspectives

Zafiris Tzannatos

June, 2016


6 pages

I2. Education and Research Institutions
J1. Demographic Economics

In a nutshell

  •  Two interconnected challenges for the Arab region are how to increase the low participation of women in the labor market and reduce its historic reliance on the public sector as employer of last resort, especially for women.
  • Empirical estimates show that the impact of education on wages (the rate of return to education) is lower in the Arab region that elsewhere. The rate of return to education is higher for Arab women than for Arab men.
  • The historically high income premium associated with employment in the public sector in the Arab region seems to have been eroded in the case of Arab men but less so for Arab women.


  • At the macro level, increase the role of private sector in creating decent employment: Reduce rentier practices and create a level playing field in the private sector; Rationalize employment in and increase the efficiency of the public sector.
  • In the area of education, adopt policies that would address its internal and external efficiency: Raise the quality and increase the relevance of education; Use public funding to genuinely boost human capital and avoid over-investment in education (e.g. in the form of credentialism or due to subsidized social demand).
  • Finally, introduce policies that would enable women to equally participate in the economic sphere: Most notably, remove legal impediments that are exceptionally prevalent in the Arab region; Reduce the labor market duality between the public and private sectors.

Zafiris Tzannatos

Economist, American University of Beirut



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