The dynamics of job creation in Egypt and Turkey

Giovanis, E and Ozdamar, Oznur (2018) The dynamics of job creation in Egypt and Turkey. In: Structural Change, Resource Misallocation and Growth Dynamics in the MENA Region, 28 February 2018 - 02 March 2018, Economic Research Forum (ERF), Luxor, Egypt. (Unpublished)

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Abstract

Firm employment dynamics is at the core of the creative destruction process and it is important to have a clear picture of the gross and net job flows. This study is motivated by the ongoing interest of policy makers in the possible sources of job creation and destruction. The aim is to explore the dynamics of job creation, destruction and net job creation rates in Egypt and Turkey, including various firm characteristics, besides the firm size and age that have not been studied so far, such as the businessstate relations (SBRs), whether the firm has been accredited with an international qualification of quality assurance and control and whether one of the owners is female. The analysis relies on firmlevel data derived from the World Bank Enterprise Surveys. We implement weighted ordinary least squares (OLS). Since the main point of interest is the SBRs we apply an Instrumental Variables Approach and the Two-Stage Least Squares (2SLS) for robustness check and to deal with the endogeneity coming from the self-reported statements and the possible degree of reverse causality. The findings show constraints to finance and political instability are the main obstacles of SBRs in both countries, including also tax rates and constraints in electricity. The quality of SBRs is found to significantly contribute to job growth. .