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Saudi Arabia has witnessed a paradox where high demand for labor did not translate into high labor force participation for Saudi women. Despite possessing higher educational attainment than men, Saudi women historically faced lower participation rates, higher unemployment, and concentration in lower-paying sectors. This paper examines the paradoxical surge in Saudi women’s employment during a period of economic weakness following the 2014 oil price shock and 2020 pandemic. The study documents unprecedented employment gains driven primarily by new labor market entrants, particularly women with high school education or less, who diversified beyond traditional education and health sectors into retail, construction, manufacturing, and food services. Through empirical analysis of policy reforms implemented between 2016-2022, the paper identifies three key drivers of Saudi women’s employment gains: the removal of legal and social barriers (including workspace requirements and driving restrictions), wage subsidies during COVID-19, and increases in the Nitaqat de facto minimum wage for Saudi workers. While these gains represent historic progress, the analysis reveals concerning trends, including a widening gender wage gap and questions regarding the sustainability of subsidy-dependent employment growth. The paper highlights the need to balance short-term policy interventions to increase women’s entry into the workforce with long-term diversification efforts that align women’s skills and wage expectations with market demands to ensure sustainable and equitable employment outcomes.
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Asia
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Do women apply more for jobs when they know the hiring probability of female job seekers directly from employers? I implemented a randomized control trial and a double-incentivized resume rating to elicit the preferences of employers and job seekers for candidates and vacancies in Iraq. The treatment reveals the job offer rate for women, calculated using the employers’ selection of women divided by the total number of female candidates. After revealing the treatment, the women applied for jobs by three more percentage points than the men in the control group. This paper highlights the value of revealing employers’ preferences to improve the match between female candidates and employers when women underestimate the chances of finding a job.
Working Papers
The success or failure of the United Arab Emirates’ (UAE) mid- and long-term growth strategy will, in large part, be determined by innovation. The country aims to continue transitioning from its past focus on oil and gas, energy-intensive products, and re-exporting services to a future economic model increasingly relying on high-value, knowledge-intensive goods and services. A successful transition will necessitate importing and adapting frontier foreign innovation, but also creating a world-class innovation ecosystem at home.
Part of this effort will entail developing further the country’s Research and Development (R&D) capabilities. While significant catch-up is already visible, much remains to be done to bring the UAE’s R&D output in line with the ambitions assigned by its leadership. The production of scientific publications and patents has been rapidly increasing over the past few years. However, the current level of scientific publications and international patenting activity remains below that of aspirational peers, such as Singapore and Norway, but also fellow Gulf Cooperation Council (GCC) countries, such as Qatar and Saudi Arabia.
One of the reasons may be simple: there are not enough researchers in the UAE. The proportion of researchers in the UAE’s workforce is below what is expected for such an advanced economy. While the UAE has been successful at attracting foreign students and skilled workers, including in STEM fields which underpin R&D activities, this has not translated into a higher density of researchers in the labor force. Determining whether that results from low current demand for R&D skills due to the country’s current economic structure or from difficulties in producing or attracting R&D talent is difficult, although both likely contribute to the issue.
Working Papers
This report examines how the United Arab Emirates can leverage three key policy tools to accelerate economic diversification and transition to a knowledge-based economy: Foreign Direct Investment (FDI), Free Zones, and Sovereign Wealth Funds (SWFs). While the UAE has successfully attracted substantial FDI inflows and diversified its export basket over the past two decades, the country continues to underperform in economic complexity and faces challenges attracting knowledge-intensive investments, particularly in research and development activities. The analysis reveals that Free Zones have evolved beyond regulatory arbitrage advantages to become mechanisms for public-private coordination and specialized public goods provision, though their contribution to broader knowledge spillovers remains limited by restrictions on mainland business interactions. Similarly, while the UAE’s SWFs have increasingly pursued domestic diversification objectives through strategic acquisitions and partnerships, their impact could be improved by better aligning foreign investments with domestic capabilities and leveraging multiple channels for knowledge transfer beyond firm relocation. The report recommends a quality-oriented approach to FDI attraction focusing on innovation and R&D activities, adaptive Free Zone management that responds to evolving firm needs, and strategic SWF investments guided by economic complexity metrics, emphasizing that successful diversification requires intensive public-private and public-public coordination across all three tools to provide the necessary inputs for new, complex activities to appear in the UAE’s economic and industrial landscape.