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Can Hiring Quotas Work? The Effect of the Nitaqat Program on the Saudi Private Sector

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  • Jennifer R. Peck

Abstract

This paper studies the effects of quota-based labor regulations on firms in the context of Saudi Arabia's Nitaqat program, which imposed quotas for Saudi hiring at private firms. I use a comprehensive firm-level administrative dataset and exploit kinks in hiring incentives generated by the quotas to estimate the effects of this policy. I find that the program increased native employment at substantial cost to firms, as demonstrated by increasing exit rates and decreasing total employment at surviving firms. Firms without any Saudi employees at the onset of the program appear to bear most of these costs.

Suggested Citation

  • Jennifer R. Peck, 2017. "Can Hiring Quotas Work? The Effect of the Nitaqat Program on the Saudi Private Sector," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 316-347, May.
  • Handle: RePEc:aea:aejpol:v:9:y:2017:i:2:p:316-47
    Note: DOI: 10.1257/pol.20150271
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    Citations

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    Cited by:

    1. Kamiar Mohaddes & Jeffrey B. Nugent & Hoda Selim, 2018. "Reforming fiscal institutions in resource-rich Arab economies: Policy proposals," CAMA Working Papers 2018-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Klasen, Stephan & Minasyan, Anna, 2020. "Affirmative Action and Intersectionality at the Top: Evidence from South Africa," GLO Discussion Paper Series 467, Global Labor Organization (GLO).
    3. Ganong, Peter & J├Ąger, Simon, 2014. "A Permutation Test and Estimation Alternatives for the Regression Kink Design," IZA Discussion Papers 8282, Institute of Labor Economics (IZA).
    4. Hertog, Steffen, 2019. "In the spotlight: demands on Saudi Aramco are increasing," LSE Research Online Documents on Economics 101249, London School of Economics and Political Science, LSE Library.
    5. Michael Levere & Purvi Sevak & David Stapleton, "undated". "Policy Changes for SourceAmerica Nonprofit Agencies: Impacts of Eliminating Section 14(c) and Reducing AbilityOne's Required Direct Labor Ratio," Mathematica Policy Research Reports dcbb25f4acc94421a7dd1cd45, Mathematica Policy Research.

    More about this item

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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    1. Can Hiring Quotas Work? The Effect of the Nitaqat Program on the Saudi Private Sector (American Economic Journal: Economic Policy 2017) in ReplicationWiki

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