Infrastructure and Employment Creation in the Middle East and North Africa

Abstract

The state of national labor markets has
\n always been a concern for governments and development
\n agencies such as the World Bank. Key labor market
\n indicators, such as the rate of unemployment, send signals
\n about the health of an economy and mirror citizens'
\n attitudes. Being gainfully employed is an important aspect
\n of an individual's well-being both financially and
\n socially, as 'initial failures in finding a job can
\n lead to persistent joblessness, a loss of interest in
\n further schooling, delayed family formation, mental
\n distress, and negative manifestations of citizenship'
\n (World Bank 2007). Increased expenditure on infrastructure
\n projects has a short-run effect on employment creation as
\n more workers are hired to build infrastructure. These jobs
\n last only during the investment phase of the project, and,
\n without a continuous injection as in a stimulus-type
\n program, such jobs will be temporary. However, the
\n investment program will have created a larger stock of
\n infrastructure capital and this permanent addition
\n facilitates additional growth in the economy. The extra
\n demand from this incremental growth creates more jobs, and
\n these tend to be permanent. Furthermore, an employment
\n experience in an infrastructure-related employment program,
\n even if temporary, might improve the chance of being
\n re-employed at a later date. This study capitalizes on the
\n World Bank's long-standing knowledge on infrastructure,
\n employment, and growth and applies it to the case of MENA to
\n assess the employment creation potential of infrastructure investment.