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Human Capital in the Middle East and North Africa
- 1. Human capital in the Middle East and North Africa Djavad Salehi-Isfahani Virginia Tech and ERF Economic Research Forum Annual Conference Cairo March 20, 2016 1 / 26
- 2. ———————————————————————————— OUTLINE ———————————————————————————— Quantity and quality of human capital Returns to schooling Education and the labor market Discussion 2 / 26
- 3. Main point Education has failed its promise. Post-independence MENA autocrats offered universal free education as path to middle class, sometimes with guarantees of state mployment. Retrenchment of the state and a lack of a robust private sector resulted in high unemployment of educated youth Lure of formal schooling has remained because of high private returns. Social returns very low, as reflected in growth accounting Wrong kind of human capital being accumulated: rote memorization, multiple choice tests, and worthless credentials from diploma mills. Mismatch of skills: the fault of the education system (World Bank [5]) or lack of linkage between the markets for education and labor. Transitions from school to work burdened by the economy’s transition from state-led to private sector-led development 3 / 26
- 4. Introduction Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 4 / 26
- 5. Introduction Broken promises High rates of unemployment of educated youth Long periods of job search, measured in years not months Education and labor markets appear disconnected Is the problem on the supply or demand side? Mismatch of skills or anemic demand for skilled labor? The issue remains unresolved 5 / 26
- 6. Human capital Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 6 / 26
- 7. Human capital Educational attainment: average years of schooling, 25+ MENA schooling has increased at a good pace, but attainment is still low relative to GDP per capita. Except Jordan, all MENA countries are below the conditional average for years of schooling BHR DZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM 051015 Years of schooling 25+ 7 / 26
- 8. Human capital Educational attainment: secondary and tertiary completion rates Percent completed secondary and tertiary BHR DZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM 020406080 6 8 10 12 Log gdppc Fitted values Percent 25-29 completed secondary Completed secondary 25-29 BHRDZAEGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM -200204060 6 8 10 12 Log gdppc Fitted values Percent 25-29 completed tertiary Completed tertiary 25-29 8 / 26
- 9. Human capital Secondary education – low attainment both for men and women BHR DZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM 020406080 6 8 10 12 Log gdppc Fitted values sec_m Men completed secondary 25-29 BHR DZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM 020406080 6 8 10 12 Log gdppc Fitted values BAR.SEC.CMPT.2529.FE.ZS Women completed secondary 25-29 9 / 26
- 10. Human capital Tertiary education – low attainment both for men and women Exceptions: Iran, Iraq, Egypt, and Tunisia BHR DZA EGY IRN IRQ JORMAR QAT SDN TUN TUR YEM -200204060 6 8 10 12 Log gdppc Fitted values ter_m Men completed tertiary 25-29 BHRDZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM -20020406080 6 8 10 12 Log gdppc Fitted values Percent female 25-29 in tertiary Women completed tertiary 25-29 10 / 26
- 11. Human capital Gender gap in education (average years of schooling) All MENA countries except Qatar and Sudan) have higher gender gap relative to their income level In Qatar women have more schooling than men BHR DZA EGY IRN IRQ JOR MAR QAT SDN TUN TUR YEM -2024 6 8 10 12 Log gdppc Fitted values yschgap Gender gap 25-29 11 / 26
- 12. Quality of human capital Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 12 / 26
- 13. Quality of human capital Evidence from international tests MENA countries, especially the oil-rich, consistently score below global average (about 500) in TIMSS math and science tests 0 50 100 150 200 250 300 350 400 450 500 Bahrain Iran Jordan Lebanon M orocco Om an Qatar Saudi Arabia Syria Tunisia Turkey UAE TIMSS math scores, 2011 Boys Girls 13 / 26
- 14. Quality of human capital Evidence from international tests MENA countries score below the conditional global average (TIMSS math scores) BHRIRN JOR MAR OMN QAT TUN TUR 300400500600 8 9 10 11 12 Log gdppc Fitted values LO.TIMSS.MAT8 TIMSS scores 2011 grade 8 14 / 26
- 15. Quality of human capital Gender gap in TIMSS scores Girls do better in a few countries in TIMSS math scores BHR IRN JOR MAR OMN QAT TUN TUR -60-40-20020 8 9 10 11 12 Log gdppc Fitted values timssgap Gender gap in TIMSS scores 15 / 26
- 16. Returns to education Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 16 / 26
- 17. Returns to education Returns to education rising with years of schooling Estimates show subject to large ability selection 0.511.5 Logwage 0 5 10 15 Years of Schooling 1988 1998 2006 Egypt 0.511.5 Logwage 0 5 10 15 Years of Schooling 1987 2001 2006 Iran 0.511.5 Logwage 0 5 10 15 Turkey 17 / 26
- 18. Returns to education Estimates of returns to education Egypt Iran Turkey 1988 1998 2006 1987 2001 2006 1988 1994 2003 Marginal effects Upper sec to Basic 0.299 0.504 0.363 0.569 0.466 0.414 0.268 0.469 0.511 Vocational to Basic 0.231 0.164 0.219 0.709 0.649 0.326 0.320 0.611 0.608 Upper sec to Vocational 0.068 0.340 0.144 -0.140 -0.183 0.088 -0.052 -0.142 -0.097 Tertiary to Upper sec. 0.307 0.012 0.298 0.544 0.449 0.447 0.580 0.529 0.720 Tertiary to Vocational 0.375 0.352 0.442 0.404 0.266 0.535 0.528 0.387 0.623 Note: Urban male wage earners (aged 20-54), Robust standard errors in parentheses, * significant at 5%; ** significant at 1% 18 / 26
- 19. Returns to education Low returns to education, except at tertiary level Private returns are close to zero for education below high school but generally high for university education (Salehi-Isfahani, Tunali, Assaad [4]) Low social returns. Pritchett [3] and Makdisi et al [2]. Family background determines wages more than quality of higher education Returns to TVE also low, likely because TVE attracts low ability students who fail the academic track 19 / 26
- 20. Returns to education Mismatch of skills Wrong kind of human capital Skills learned in schools not those needed by private sector A legacy of public sector hiring of graduates, offering secure, well paying jobs Public sector hiring was based on more ex ante signals (grades, university rank) Private sector values skills and productivity, but . . . Schools encourage rote memorization, not creativity, and use multiple choice tests to measure skills 20 / 26
- 21. Education reform Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 21 / 26
- 22. Education reform Summary of findings and policy implication Education has stopped delivering on its promise of social mobility Diploma mills produce credentials rather than productive skills Labor markets have changed but signals to education sector have not Reforms should focus on sharpening the signals of how skills are rewarded by private employers 22 / 26
- 23. Education reform Transition from school to work Policies should aim to improve job search and transitions from school to work Consider behavioral approaches to search Youth lose the sense of belonging they have in schools when they graduate, but do not get it back until they have a formal job. 23 / 26
- 24. References Outline 1 Introduction 2 Human capital quantity 3 Quality of human capital 4 Private and social returns to schooling 5 Education reform 6 References 24 / 26
- 25. References References I Ragui Assaad, Caroline Krafft, and Djavad Salehi-Isfahani. Technical report, 2015. Samir Makdisi, Zeki Fattah, and Imad Limam. Determinants of growth in the MENA region. In J. Nugent and M. H. Pesaran, editors, Explaining Growth in Middle East and North Africa, Contributions to Economic Analysis. Elsevier, London, 2007. Lant Pritchett. Has education had a growth payoff in the MENA region? MENA Working Paper Series 18, World Bank, Washington, D.C., 1999. 25 / 26
- 26. References References II Djavad Salehi-Isfahani, Insan Tunali, and Ragui Assaad. A comparative study of returns to education of urban men in Egypt, Iran and Turkey. Middle East Development Journal, 1(2):145–187, 2009. World Bank. The Road not Traveled: Education Reform in the MENA Region. World Bank, Washington, DC, 2007. 26 / 26