Unemployment in MENA and

around the world

• Unemployment is especially high in MENA
• Around the world, unemployment peaks in middle-
income countries, which includes most MENA
countries
• Why?
– Higher productivity tends to reduce unemployment
– If productivity in wage employment is low enough, workers
choose “necessity entrepreneurship” instead
– Negative selection into necessity vs “opportunity”
entrepreneurship, because only latter rewards skill
– Increase in ratio of unskilled to skilled unemployment as
productivity (per capita GDP) increases
• Special features of MENA countries that exacerbate
problem: expectations of government employment
 Unemployment rate vs. LPCGDP, 2005
40

35

MRT
30

25 y = -1.2962x2 + 22.592x - 87.458

R² = 0.1181

20 LBY
IRQ
YEM
15 SDN JOR DZA
TUN
IRN
MAR EGY TUR
10
LBN OMN
COM SAU
5 BHR
ARE
KWT
QAT
0
6 7 8 9 10 11 12