Three Analytical Essays on the Saudi Labour Market: Trends, Challenges, and Opportunities

Abstract

The Saudi unemployment trend has long puzzled policymakers and labour economists. Over the past two decades (1999–2019), national unemployment has continued to rise, despite economic growth, job creation, and improved living standards. Even with robust economic reforms and labour market interventions, unemployment remained high, particularly among Saudi women and in rural areas, posing significant socio-economic challenges. This thesis explores unique aspects of unemployment by addressing particular hidden factors and chronic root causes in its three empirical chapters, aiming to provide policymakers with insights that would aid them in re-calibrating the unemployment trend and developing more effective interventions. The first empirical chapter investigates the persistent gender unemployment gap in the Saudi labour market using the Labor Force Survey (LFS) microdata for the years 2018–2020. The findings indicate that the controlled variables explain 75 to 90 per cent of this gap; the remaining 10 to 25 per cent is attributable to unobserved variables, with discrimination being a potential factor. The second empirical chapter quantifies the differential probabilities of unemployment among population groups across Saudi regions to determine whether these differentials are influenced by demographic or regional effects. The results indicate that the higher risk of unemployment in Al-Jawf, Al-Baha, Al-Madina, and Jazan relative to Riyadh is primarily influenced by regional factors. In contrast, the higher unemployment in Hail, Asir, and Najran is largely associated with demographic factors. The third empirical chapter explores the relationship between unemployment and job vacancies across Saudi regions and the effect of the targeted localisation policies on this relationship over the period 2018–2019. The findings show that national-level targeted localisation policies are effective in major regions with a high concentration of businesses and firms. Conversely, in regions with lower business density, regional-level targeted localisation policies are more successful when accompanied by close monitoring.