This document discusses problems in labor markets in the Middle East and North Africa region and suggestions for continuing labor research. It covers four main topics: 1) issues with informal sectors and labor regulations based on ERF studies; 2) the importance of rural-urban migration; 3) challenges with education systems not matching job demands; and 4) progress made with developing panel data but needing to link worker and firm data. It concludes with suggestions to improve existing data and analyses, expand data collection to new sources like social media and administrative records, and conduct small experiments to test policy ideas.

1. Problems and Research in MENA Labor Markets
1- ERF MENA studies on labor: the three reviews
2 – Suggestions for Continuing Progress in Labor Research
Richard B. Freeman, Harvard and NBER, CEP, LSE
Economic Research Forum,
Labor Markets Aida Ballroom
Cairo, March 19, 2016

2. 1. Distinct Problems and ERF Studies
Developing country labor markets are distinguished by large stable
informal sectors; rural/urban divides; a catch-up in education and
shortfall of supply and demand of educated workers
1)Informal sector/labor regulations – govts want more workers in
formal jobs; industry wants less labor protection.
● WB/OECD approach is to reduce costs of formal by weakening labor
regulations. Need information on benefits of formal jobs – lower
turnover, more OJT, loyalty, etc – to assess likely success. Weak
relation of min wage to employment and strong el faro wages effect
shifts research from concern over jobs to income distribution.
● China 2007 Labor Contract Law ordered firms to give rural migrants
(& others) written contracts, and indefinite duration after holding job
for some time. Increase in % with contracts from 40% to 60% and soc
security benefits. Under attack now.

3. ● Wahba study of 2003 Egypt law that created one year
repeating job alternative to indefinite duration job finds 0.03
increase in % working in formal sector, much less than
China's 2007 law.
● But is lower % informal good goal? In Great Recession
informal employment helped developing countries weather
job loss better than advanced countries. And advanced
countries going informal with 0 hours contracts. Need
comparative country experiences.
2) Rural/urban internal migration
Fundamental to modernization and reducing inequality. ERF
work on return migrants (session tmrw) would benefit from
parallel analysis of internal migration and also comparative
cross country.

4. 3) Education catch-up—
Big development successes – South Korea, China (and finally
India?) invested big in increasing university enrollments,
while expanding investment in medium or high-tech sectors.
China building “university per week”
Salehi-Isfahani's review gives depressing picture of education
in MENA: laggard enrollments, old-fashioned schooling
memorization, and poor link from education to job market.
What do jobless youth do? With their free time, is there way
to add to skills through novel use of MOOC low cost
education and connect them to firms when demand picks up?
Research ought to move beyond rates of return to time
budgets and career trajectories and to seek places for low cost
intervention, possibly using field experiments or competition.

5. 4. Dynamics of labor force adjustments.
Labor analyses has progressed from static cross sections to
panel data linked employee-employer panels. Aassad's review
of the ERF experience in developing/encouraging/and
analyzing labor force panel data and in open access microdata
initiative seems right way to go and striking success. The
various charts in the presentation raise multiple questions
regarding differences between countries/groups to guide
further research. To what extent do MENA international
students and PhD students in the area use these and other data
in their research work (instead of US, Canadian, or other data
of destination countries)?
The next and harder step is to develop data files that link
worker cross sections and panels to employer data, so as to
illuminate demand/supply interactions, etc.

6. 2 – Suggestions for Continuing Progress in Labor Research
● To keep pace with current and likely future direction of
change in labor and related data-driven economic research,
the EFS Labor Program might usefully think about :
Improving existing data sets and analysis
– 1) Seek researcher input into questions on govt or other
survey data: responses to the right question will better
resolve debates than fancier models.
– 2) Analyze the distribution of outcomes and responses
for workers or firms along with their mean outcomes/
responses as part of the heterogeneity in economic hehavior.
Expanding to new data sets
– 3) Encourage statistical agencies to combine worker
longitudinal data with data on the firms for which they work to
create employee/employer panel

7. 4) Gather data from Internet via webscraping and other
techniques on worker sentiment in social media, and on
employment on job boards, company listings.
5) Seek administrative govt and firm data for “insider
econometrics” of organizational responses and the career paths
of people who stay for long times in same firm.
New Areas for helping provide evidence for policies
6) Runnning small field experiments to test out policy ideas –
such as incentives ways to increase formal sector jobs, starting
jobs for youths; training systems
7) Work with macro/ computer simulation modelers to analyze
potential general equilibrium effects and develop
counterfactuals for potential future or past changes in policy.