The effects of institutions and natural resources in heterogeneous growth regimes with endogeneity

Yacine Belarbi , Lylia Sami , Saïd Souam

Since the seminal paper of Sachs and Warner (1995), several justifications have been advanced to explain the observed disparities in the performance between the oil resource dependent economies. The most important one deals with the quality of the institutions although no agreement has been made on the importance of their role, or the direction in which they affect economic growth. Some recent studies point to the interaction effect on growth of both “natural resources” and “institutions” factors. In this paper, we focus on these interaction effects to explain why countries rich in oil resources can be both winners and losers due to ions of their institutions. We use a specific econometric approach to e simultaneously analyse the interaction effects and the threshold from which the so-called ‘natural resource curse’ can be reversed. We examine the effect of the interaction between natural resources and the quality of institutions on corruption and economic growth, and the interaction between natural resources and the revenue level on corruption and economic growth. The estimation of our models is based on a sample of 24 countries for the period 2000-2015.

Skills mismatch and returns to education in Jordan

Nooh Alshyab, Serena Sandri, and Ziad Abu-Lila

Education is an investment and its returns, in terms of increased wages, can be used as an indicator of productivity in an economy. Also, skills utilisation is important for productivity and whenever there is a misalignment between the skills demanded and those available, it is spoken of as skills mismatch. This paper provides an overview on skills mismatch and estimates gender differences in the returns to education in Jordan. The econometric analysis is hereby based on the estimation of fixed effects’ models on a set of pseudo panel data, covering the period between 2000 and 2015. The findings reveal that returns to education for male employees are higher than for female employees (the wage premium from one additional year of schooling is 6.8% for males and 5.4% for females) and that, on average, females are paid 74% of what males earn. We explain this result based on some peculiarities of female participation in Jordan’s labour market. Concerning skills mismatch, the analysis points to the existence of over-education and under-skilling.

Asset Inequality in MENA – The Missing Dimension?

Vladimir Hlasny and Shireen AlAzzawi

Studies of economic inequality have traditionally relied on income or consumption as their welfare aggregate. This is problematic, because households choose their labor market participation, and smooth their consumption over time based on their wealth. Neither income nor consumption measures welfare or inequality perfectly. Wealth must be accounted for as an economic outcome as well as a driver of lifetime opportunities. Since wealth is distributed more widely, and is related positively to income and consumption, overall inequality is likely to exceed inequality measured by income or consumption alone. We use panel surveys and wealth indexes based on productive and non-productive household assets to examine economic inequality in four MENA countries – Egypt, Ethiopia, Jordan and Tunisia. Wealth distribution and households’ economic mobility are evaluated across surveys. To mitigate ordinality of wealth indexes, they are benchmarked by applying relative asset prices estimated in one survey to other surveys.

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