human capital in the middle east and north africa

Human capital in the Middle East and North

Africa

Djavad Salehi-Isfahani

Virginia Tech and ERF

Economic Research Forum Annual ConferenceCairo

March 20, 2016

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————————————————————————————OUTLINE————————————————————————————

Quantity and quality of human capital

Returns to schooling

Education and the labor market

Discussion2 / 26

Main point

Education has failed its promise. Post-independence MENAautocrats 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 sectorresulted in high unemployment of educated youth

Lure of formal schooling has remained because of high privatereturns. 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’stransition from state-led to private sector-led development

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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

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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 skillsor anemic demand for skilled labor? The issue remainsunresolved

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Human capital

Outline

1 Introduction




5 Education reform

6 References

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Human capital

Educational attainment: average years of

schooling, 25+

MENA schooling has increased at a good pace, but attainment is stilllow relative to GDP per capita. Except Jordan, all MENA countriesare below the conditional average for years of schooling

BHRDZA

EGY

IRN

IRQ

JOR

MAR

QAT

SDN

TUN TUR

YEM

05

1015

6 8 10 12Log gdppc

Fitted values BAR.SCHL.25UP

Years of schooling 25+

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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

020

4060

80

6 8 10 12Log gdppc

Fitted values Percent 25-29 completed secondary

Completed secondary 25-29

BHRDZAEGY

IRN

IRQ

JORMAR QATSDN

TUN

TUR

YEM

-20

020

4060

6 8 10 12Log gdppc

Fitted values Percent 25-29 completed tertiary

Completed tertiary 25-29

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Human capital

Secondary education – low attainment both for

men and women

BHR

DZA

EGY

IRN

IRQ

JOR

MARQAT

SDN

TUN

TUR

YEM

020

4060

80

6 8 10 12Log gdppc

Fitted values sec_m

Men completed secondary 25-29

BHR

DZA

EGYIRN

IRQ

JOR

MAR

QAT

SDN

TUN

TUR

YEM0

2040

6080

6 8 10 12Log gdppc

Fitted values BAR.SEC.CMPT.2529.FE.ZS

Women completed secondary 25-29

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Human capital

Tertiary education – low attainment both for men

and women

Exceptions: Iran, Iraq, Egypt, and Tunisia

BHRDZA

EGY

IRN

IRQ

JORMARQAT

SDN

TUNTUR

YEM

-20

020

4060

6 8 10 12Log gdppc

Fitted values ter_m

Men completed tertiary 25-29

BHRDZAEGY

IRNIRQ

JORMAR

QAT

SDN

TUN

TURYEM

-20

020

4060

80

6 8 10 12Log gdppc

Fitted values Percent female 25-29 in tertiary

Women completed tertiary 25-29

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Human capital

Gender gap in education (average years of

schooling)

All MENA countries except Qatar and Sudan) have higher gendergap relative to their income levelIn Qatar women have more schooling than men

BHR

DZA

EGY

IRN

IRQ

JOR

MAR

QAT

SDN

TUN TUR

YEM

-20

24

6 8 10 12Log gdppc

Fitted values yschgap

Gender gap 25-29

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Quality of human capital

Outline

1 Introduction




5 Education reform

6 References

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Evidence from international tests

MENA countries, especially the oil-rich, consistently score belowglobal average (about 500) in TIMSS math and science tests

050100150200250300350400450500

Bahrain Ira

n

Jordan

Lebanon

Morocco

Oman

Qatar

SaudiArabia

Syria

Tunisia

Turkey

UAE

TIMSSmathscores,2011

Boys

Girls

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Evidence from international tests

MENA countries score below the conditional global average (TIMSSmath scores)

BHRIRNJOR

MAR OMN

QATTUN

TUR

300

400

500

600

8 9 10 11 12Log gdppc

Fitted values LO.TIMSS.MAT8

TIMSS scores 2011 grade 8

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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

-20

020

8 9 10 11 12Log gdppc

Fitted values timssgap

Gender gap in TIMSS scores

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Returns to education

Outline

1 Introduction




5 Education reform

6 References

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Returns to education rising with years of schooling

Estimates show subject to large ability selection

0.5

11.5

Log w

age

0 5 10 15Years of Schooling

1988 1998

2006

Egypt

0.5

11.5

Log w

age


1987 2001

2006

Iran

0.5

11.5

Log w

age


1988 1994

2003

Turkey

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Estimates of returns to education

Egypt Iran Turkey1988 1998 2006 1987 2001 2006 1988 1994 2003

Marginal effectsUpper sec to Basic 0.299 0.504 0.363 0.569 0.466 0.414 0.268 0.469 0.511Vocational to Basic 0.231 0.164 0.219 0.709 0.649 0.326 0.320 0.611 0.608Upper sec to Vocational 0.068 0.340 0.144 -0.140 -0.183 0.088 -0.052 -0.142 -0.097Tertiary to Upper sec. 0.307 0.012 0.298 0.544 0.449 0.447 0.580 0.529 0.720Tertiary 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%

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Low returns to education, except at tertiary level

Private returns are close to zero for education below high schoolbut 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 ofhigher education

Returns to TVE also low, likely because TVE attracts low abilitystudents who fail the academic track

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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 usemultiple choice tests to measure skills

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Education reform

Outline

1 Introduction




5 Education reform

6 References

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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 sectorhave not

Reforms should focus on sharpening the signals of how skills arerewarded by private employers

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Education reform

Transition from school to work

Policies should aim to improve job search and transitions fromschool to work

Consider behavioral approaches to search

Youth lose the sense of belonging they have in schools when theygraduate, but do not get it back until they have a formal job.

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References

Outline

1 Introduction




5 Education reform

6 References

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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 inMiddle 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.

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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.

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human capital in the middle east and north africa

Economy & Finance