What Factors Influence Firm Perceptions of Labour Market Constraints to Growth in the MENA Region?
Labour
market constraints constitute prominent obstacles to firm development and
economic growth of countries located in the Middle East and North Africa (MENA)
region. This paper aims at examining the implications of firm characteristics,
national locations, and sectoral associations for the perceptions of firms
concerning two basic labour market constraints: labour regulations and labour
skill shortages. The empirical analysis is carried out using firm-level dataset
sourced from the World Bank’s Enterprise Surveys database. A bivariate probit
estimator is used to account for potential correlations between the errors in
the two labour market constraints’ equations. We implement overall estimations
and comparative cross-country and cross-sector analyses, and use alternative
estimation models. The empirical results reveal some important implications of
firm characteristics (e.g., firm size, labour compositions) for firm
perceptions of labour regulations and labour skill shortages. They also
delineate important cross-country and cross-sector variations. We also find
significant heterogeneity in the factors’ implications for the perceptions of
firms belonging to different sectors and located in different MENA countries.
This paper provides policy-makers with information needed in the design of
labour policies that attenuate the impacts of labour market constraints and enhance
the performance of firms and the long-run economic growth.
[ - ]