More Stabilisation or Better Allocation: Do Macroeconomic Policies Matter for Employment?

Rym Ayadi, Rafik Selim, Chahir Zaki

This paper analyses the effect of macroeconomic policies on employment. It contributes to the literature in three ways. First, we examine the effect of macroeconomic policies on employment. To do so, we rely on policy tools, rather than policy outcomes, since the former are less endogenous. In other words, we rely on tariffs to measure trade policy (instead of exports and imports), tax rates to measure fiscal policy (instead of government spending) and lending rate (instead of inflation rate) to measure monetary policy. Second, we distinguish between stabilisation policies and structural characteristics. Whilst the aforementioned policies measure the former, we measure the latter by the quality of economic institutions (time to enforce contracts), human capital (spending on tertiary education) and economic diversification (share of fuel exports). Third, we distinguish between the trend and the cyclical components of employment, to show to what extent policy tools have a stabilisation effect (on the cyclical component) or a better allocation effect (on the trend component).


Nora Aboushady, Yasmine Kamal, Chahir Zaki

This paper proposes a comprehensive assessment of the effect of different trade barriers (tariffs, non-tariff measures and services restrictions) on wages in the Middle East and North Africa (MENA) region. These disparities are studied in four dimensions: wage premiums, gender (males versus females), qualification (skilled versus unskilled), and regional (urban versus rural workers). We use three datasets, which are the Egyptian Labour Market Panel Survey (2012), the Jordanian Labour Market Panel Survey (2010) and the Tunisian Labour Market Panel Survey (2014). Following Goldberg and Pavnick (2004) and Zaki (2013), we directly assess the effect of trade policy on wage disparity using the human capital model (Mincer, 1974) to which different trade barriers are added. Our results suggest that, in general, the effect of services restrictions and non-tariff measures are much stronger than that of tariffs on wage premium. When we look at different segments, we find that females are more affected by non-tariff measures than their male counterparts. At the skill level, and given the abundance of blue collar workers in the MENA region, production workers are less affected by both non-tariff measures and by services restrictions than non-production workers, but are more affected by tariffs. Finally, all trade barriers do not have a differential effect on urban vs. rural workers.

Financial Development and Employment: New Evidence

Rym Ayadi, Sami Ben Naceur, Mohamed Goaied

This paper adds to the existing literature on finance and growth, by exploring the effect of finance on the labour market, using data on 143 countries from 1995 to 2015. We also examine whether the impact of financial development on labour is significantly different prior to and after the 2008 global financial crisis. This paper has five main findings: first, the analysis confirms the positive relationship between the efficiency of and access to financial institutions and the employment rate in the linear specification; second, the marginal returns to employment from further financial institution inclusion diminish at high levels of inclusion and turn negative when a certain threshold is reached; third, the effects of financial market access on employment create a U-shaped relationship, where financial market access begins  impacting on employment when a threshold of access is reached; fourth, the positive effect of financial development on employment strengthens with the country’s institutional quality; finally, there is strong support for financial development having a negative impact on employment during the 2008 global financial crisis.

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