Job Search Intensity and the Role of Social Networks in Finding a Job in Arab Countries: A Case Study of Algeria and Jordan

Moundir Lassassi, Ibrahim Alhawarin
29/03/2018

Using nationally representative data from Algeria and Jordan, this paper shows that social networks are crucial in labour market intermediation in Arab countries. We make use of binary and ordered probit regressions, corrected for sample selection using the Heckman model, to investigate determinants of job search intensity and determinants of the probability of finding a job through social contacts. After factoring the sample selection, our findings suggest that the use of population density as a proxy for the size and strength of social networks may only be appropriate for the studies of minorities and immigrants.  We propose that strong ties (closer friends and relatives, and maybe friends on social media) may be more crucial in job finding than weak ones (number of inhabitants in adjacent areas). On average, the analysis shows that job search is more intensive in Jordan compared to Algeria. Among others, household wealth, the local unemployment rate, region, previous labour market experience, and to some extent education, appear to exert significant roles in determining intensity. Importantly, the study finds that social networks are a popular method of finding a job in Algeria and Jordan, but not for skilled jobs. Such methods increase the probability of obtaining less secured informal jobs.  Finally, the study also shows that despite the importance of public sector agencies in the job search process, less than 5% in Algeria and 9% in Jordan of the young employed state that such agencies have helped them transit into employment.

Banking Competition, Convergence and Growth across Macro-Regions of MENA

Samah Issa, Claudia Girardone and Stuart Snaith
28/03/2018

This paper represents the first study to examine convergence of bank competition in the Middle East and North Africa (MENA) and the impact of bank market power on growth. Using a sample from 16 countries over 2005-14 and forming macro-regions based on oil export allowances to capture intra-regional country differences, our results suggest that banking competition has increased over the period under investigation. In addition, using alternative tests, we find clear evidence of convergence in banking competition across the three macro-regions, as well as in MENA as a whole. Further, our results show that industrial sectors that are normally more dependent on external financing grow faster in countries characterised by greater financial development. Finally, our analysis of the impact on economic growth points to a positive and significant effect of bank market power on economic growth in two out of three macro-regions. This is in line with the relationship lending literature that suggests that in a competitive environment, banks will be less willing to avail finance to informationally opaque firms. A major implication of this analysis is that some degree of market power in the banking sector may be beneficial because it can improve lending availability and, hence, economic growth.

Financial Development and Inclusion in Egypt, Jordan, Morocco and Tunisia

Rym Ayadi and Willem Pieter de Groen (Editors), Taghreed Hassouba and Chahir Zaki (Egypt), Nooh Alshyab and Serena Sandri (Jordan), Idriss Elabbassi, Aziz Ragbi and Said Tounsi (Morocco), Soumaya Ben Khelifa, Olfa Benouda Sioud, Rania Makni and Dorra Mezzez Hmaied (Tunisia)
27/03/2018

The link between financial development and sustainable economic growth is complex. The academic literature published on this topic in recent years finds that financial development contributes to growth up to a certain tipping point. Beyond this tipping point, financial development would make the overall system more fragile. The benefits of financial development and the level of the tipping point seem to vary between economies. Among the factors that contribute to the variance are the composition of the financial system (institutions and market based intermediation), access (financial inclusion) and efficiency (government interventions, allocation, etc.). The complexity of the relationship between financial development and economic growth requires the assessment of the factors affecting the relationship in order to determine the most effective policies. In this study, we provide an assessment of the various factors determining financial development in terms of the financial sector structure, contribution to the economy and financial inclusion in four countries mainly Egypt, Jordan, Morocco and Tunisia.

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