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The Oil Curse and Labor Markets: The Case of Saudi Arabia

Author

Listed:
  • Hend Al-Sheikh
  • S. Nuri Erbas

    (International Monetary Fund (IMF))

Abstract

Oil income enables generous government sector wage and employment policies in Saudi Arabia. Combined with availability of low-cost foreign labor and rapidly growing working age population, large disparity between government and private sector salaries skews Saudi worker preferences for government sector employment, increases their reservation wages for private sector employment, and results in high unemployment. Initiatives under 2011 Royal Decrees for increased government sector employment and compensation may further exacerbate Saudi unemployment in the longer run. Oil curse in Saudi Arabia is also on persistent and large Saudi unemployment.

Suggested Citation

  • Hend Al-Sheikh & S. Nuri Erbas, 2012. "The Oil Curse and Labor Markets: The Case of Saudi Arabia," Working Papers 697, Economic Research Forum, revised 2012.
    • Handle: RePEc:erg:wpaper:697
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    Cited by:

    1. Moawad Ahmed, Sayed, 2016. "The Impact of Oil Prices on the Economic Growth and Development in the MENA countries," MPRA Paper 89073, University Library of Munich, Germany.
    2. Hend Al Sheikh & S. Nuri Erbaş, 2013. "Labor Income And Oil Wealth: A Broader Sustainability Framework For Saudi Arabia," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-31.

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