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Expatriate jobs and productivity: Evidence from two GCC economies

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  • Erumban, Abdul.A.
  • Al-Mejren, Abbas

Abstract

The oil-rich GCC economies are increasingly adopting job nationalization policies to create employment for natives. The higher wage rate of natives compared to migrants makes this challenging for private sector firms. This paper analyzes productivity differences between migrants and nationals using detailed industry-level data from Kuwait and Saudi Arabia. Employing an extended Cobb-Douglas production function, we find that migrant workers have a productivity advantage over nationals. Combined with their lower wages, this results in a lower unit labor cost, making it challenging for private enterprises to shift away from relying on expatriate workers. Long-term, GCC economies need to invest in upskilling natives and fostering a competitive labor market to create productive jobs for natives.

Suggested Citation

  • Erumban, Abdul.A. & Al-Mejren, Abbas, 2024. "Expatriate jobs and productivity: Evidence from two GCC economies," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 248-260.
    • Handle: RePEc:eee:streco:v:71:y:2024:i:c:p:248-260
    DOI: 10.1016/j.strueco.2024.07.007
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    More about this item

    Keywords

    Productivity; Migration; GCC; Diversification; Oil-economy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • F2 - International Economics - - International Factor Movements and International Business

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