Enhancing Links Between Education & Labor Markets in Arab Countries .


Title : Enhancing Links Between Education & Labor Markets in Arab Countries

ISSN : 11

Publisher : Arab Planning Institute - Kuwait

Author : Ahmed Al-Kawaz (Editor)

Published Date : 2002

Contents :

The recent concern on reviving relationship between education and labor markets is deeply rooted in the recent interest of human capital theory. One of the most typical treatments of such relationship is the link between the level of education and the level of earnings in labor markets. Under the human capital theory, the earnings are determined by the individual?s stock of human capital. This capital may be increased by investment in education, health, or training. The conference on Enhancing Links Between Education and Labor Markets in Arab Countries is related to the first type of investment.

Since education plays a substantial role in accumulating human capital, and consequently economic growth, the literature on this role is immense. Unlike investment in physical capital, investment in human capital is affected not only by increase in stock, but by transfer of the existing stock from one generation to another (Salehi, Isfahani, 2001).

One of the well-known contributions in this regard, is the work of G. Psacharopoulous, where 29 developing countries were included. The study revealed that the contribution of education in economic growth ranges from 1% in Mexico to 23% in Ghana in the early 1980s (Psacharopoulous, 1984). On the contrary, L. Pritchett reported a negative relationship between education and economic growth based on data of 91 countries. He attributed this result to (a) schools do not help in accumulation of human capital; (b) marginal returns on education tend to decline remarkably when the demand on educated labor is constant; and (c) institutional environment does not allocate educated labor to growth-enhancing activities (Pritchett, 1999).
On the other hand, where cross sectional analysis for 58 countries showed a negative relationship between education and economic growth in the African region, Middle East and North Africa, insignificant relationship was found in the case of Latin America and South Asia, and a positive and significant relationship in East Asia region (Lawrence, Jamison, and Louat, 1991).