Esther Mirjam Girsberger (University of Technology Sydney), "The Puzzle of Educated Unemployment in West Africa"
"The Puzzle of Educated Unemployment in West Africa"
Esther Mirjam Girsberger (University of Technology Sydney)
November 14, 2023, 12:00 to 1:00 PM
Abstract: Many developing countries exhibit a puzzling pattern given their scarce human capital: unemployment rates increase with or are hump-shaped in education. We develop and estimate a model where educated unemployment arises from heterogeneous workers participating in a frictional labour market with three sectors (public, private and self-employment). We estimate that public sector distortions explain around two-thirds of educated unemployment in urban Burkina Faso and one-quarter in Senegal. We then simulate three equally costly policies. In contrast with public job creation and subsidies to self-employment income, subsidies for private sector vacancy creation effectively reduce educated unemployment and improve workers’ welfare.