Determinants of government labor demand in the GCC states

Abstract

The main objective of this paper is to analyze the determinants of labor demand for the governments sectors of the GCC states. Paucity of data plus efficiency considerations pertaining to the labor markets in the GCC states has entailed the use of pooled cross-section time-series estimation methods. Estimation results show that the GCC states have common factors affecting government labor demand. Thus, similar economic and labor markets features are reflected in the specified labor demand equation. Estimation reveals that governments labor demand responds in opposite directions to government and private employment compensations and to private employment size. Labor demand is inelastic with respect to these variables. In addition, there exist increasing returns to scale in the oil sector of the GCC states with respect to government employment.