Employment Beyond Oil: Structural Drivers and Institutional Moderators in MENA Countries

The Middle East and North Africa region (MENA) continues to struggle with the economic growth paradox of expanding while experiencing ineffective job creation, particularly among the youth and women. This paper examines the employment structure factors beyond oil reliance and the moderating effect of institutions and demographic transition on 14 MENA countries between 2000 and 2023. Based on Structural Change Theory, Institutional Theory, and Demographic Transition Theory, the analysis employs panel data regression to examine the impact of human capital, financial depth, digital modernization, structural transformation, and resource dependence on labour absorption. The results demonstrate that human capital growth, financialization, digitalization, and institutionalization bring about a profound impact on employment. In contrast, resource dependence and high fertility rates have the opposite effect, absorbing labour markets. Surprisingly, urbanization has no significant impact, suggesting that the region has negligible industry diversification. In addition, the implications of financial and digital modernization for employment are positively moderated by institutional quality, underscoring governance as a significant facilitator of inclusive employment. On the other hand, demographic transition moderates the effects of education and structural change negatively, meaning that high fertility rates dilute the benefits of human capital and employment changes. These findings indicate that there is no single driver that can address the employment challenge; instead, sustainable labour market outcomes will be achieved through the interaction of structural forces, institutional capacity, and demographic dynamics. This paper offers policy implications for reducing jobless development, fostering differentiation, and creating comprehensive, sustainable jobs in the MENA region.