Labor-Use Efficiency in Saudi Manufacturing Sectors
DOI:
https://doi.org/10.6000/1929-7092.2018.07.16Keywords:
Labor Saudization, Labor-use efficiency, Panel data, Saudi, Speed of adjustment, Technical change.Abstract
This paper seeks to examine the process of adjustment in labor and to measure labor-use efficiency in Saudi manufacturing sectors. The theoretical framework is based on a dynamic flexible adjustment model applied to a panel of seven Saudi industries observed from 2007 to 2015. It investigates the process of adjustment in labor Saudization level toward a desired level. The adjustment process is both industrial and time-specific, and is expressed in terms of factors affecting the speed of adjustment. The empirical results show that, in the long run, labor Saudization responds greatly to gross domestic product, followed by unit Saudi wage and least by non-Saudi labor. In addition, labor over-use in Saudi manufacturing sectors is reduced after application of Nitaqat program.
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https://doi.org/10.11634/216796061302294
Alshanbri, N., Malik Khalfan, M. and Maqsood, T.( 2015), “Localization Barriers and the Case of Nitaqat Program in Saudi Arabia”, Journal of Economics, Business and Management, Vol. 3, No. 9.
Arrelano, M. and Bond, S., (1991), “Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations”. Review of Economic Studies, 58 (2), 194, 277–297.
https://doi.org/10.2307/2297968
Baltagi, B. and Griffin, J. M., (1997), “Pooled estimators vs their heterogeneous counterparts in the context of dynamic demand for gasoline”. Journal of Econometrics, 77, 303–327.
https://doi.org/10.1016/S0304-4076(96)01802-7
Bhandari A. K. and A. Heshmati (2005), “Labour Use and its Adjustment in Indian Manufacturing”, Global Economic Review 34(3), 261-290.
https://doi.org/10.1080/12265080500292591
Goldin, C and Katz, L.F., 1998, “The origins of technology-skill complementarity”, Quarterly Journal of Economics 113, 693-732.
https://doi.org/10.1162/003355398555720
Haouas I., M. Yagoubi and A. Heshmati (2003), “Labour-Use efficiency in the Tunisian’s Manufacturing Industries: A Flexible Adjustment Model”, The Review of Middle East Economics and Finance 1(3), 195-214.
https://doi.org/10.1080/1475368032000158214
Hazledine, T., (1981), “Employment functions and the demand for labor in the short-run. In: The Economics of the Labor Market”, edited by Z. Hornstein, J. Grice and A. Webb (London: HMSO), pp. 147–181.
Judson, R. A. and Owen, A. L., (1999), “Estimating dynamic panel data models for macroeconomists”. Economics Letters, 65, 9–15.
https://doi.org/10.1016/S0165-1765(99)00130-5
Kumbhakar, S. C., Heshmati, A. and Hjalmarsson, L., (2002), “How fast do banks adjust? a dynamic model of labor-use with an application to Swedish banks”. Journal of Productivity Analysis, 18 (1), 79–102.
https://doi.org/10.1023/A:1015756527109
Kumbhakar, S. C. and Hjalmarsson, L., (1995), “Labor-use efficiency in Swedish social insurance offices”. Journal of Applied Econometrics, 10, 33–47.
https://doi.org/10.1002/jae.3950100104
Kumbhakar, S. C. and Zhang, R., (2013) analyse “Labor-use efficiency and employment elasticity in Chinese manufacturing”. Journal of Industrial and Business Economics, 40 (1), 5–24.
Masso J. and A. Heshmati (2004), “Optimality and Overuse of Labour in Estonian Manufacturing Enterprises”, Economics of Transition 12(4), 683-720.
https://doi.org/10.1111/j.0967-0750.2004.00199.x
Nerlove, M., 2000, “Growth rate convergence, fact or artifact? an essay in panel data econometrics. In: Essays in Honor of Pietro Balestra”, edited by J. Krishnakumar and E. Rochetti (Amsterdam: Elsevier Sciences), pp. 3–34.
Pindyck, R. S. and Rotemberg, J. J., (1997), “Dynamic factor demands under rational expectations”. Scandinavian Journal of Economics, 85 (2), 223–238.
https://doi.org/10.2307/3439480
Pissarides, C.A., (1997), “Learning by trading and returns to human capital in developing countries”, World Bank Economic Review 11, 17-32.
https://doi.org/10.1093/wber/11.1.17
Sadi, M. (2013), “The Implementation Process of Nationalization of Workforce in Saudi Arabian Private Sector: A Review of “Nitaqat Scheme” ”, American Journal of Business and Management Vol. 2, No. 1, 37-45.
https://doi.org/10.11634/216796061302294
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Published
2018-04-05
How to Cite
Saggay, A., & Raies, A. (2018). Labor-Use Efficiency in Saudi Manufacturing Sectors. Journal of Reviews on Global Economics, 7, 174–185. https://doi.org/10.6000/1929-7092.2018.07.16
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