The Labor Mobility-Employment Nexus: A General Equilibrium Analysis for Jordan

The global crisis had a negative impact on growth and unemployment in Jordan and this effect is likely to persist in the coming years. Besides, Jordan is a significant migrant sending country, thus providing an interesting context within which to investigate the interactions between international labor mobility and domestic labor market outcomes. The crisis scenario shows that the rise in unemployment is due to a simultaneous increase of labor supply, induced by lower transfers and a decrease in labor demand. Emigration decreases at the beginning of the period, but rebounds once the Gulf countries recover from the global crisis. The counterfactual increase of service exports has a positive impact on GDP growth and on aggregate unemployment. Emigration decreases, mainly for high skilled workers. The increase of receiving countries' wages has a positive impact on unemployment reduction and wages. The effects are channeled through increased migration incentives and higher remittances which lower the pressure on the local labor market, mainly through higher emigration and a lower labor participation rate. When the wage increases are limited to highly skilled workers, the observed reduction of unemployment and the wage increase for high skilled workers is much higher than in the previous scenario. However, low and medium skilled workers' unemployment levels increase. Finally, education transitions are significantly increased by the higher wage premium.  

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