Technical efficiency of Iraq's labour market

Abstract

The assessment of the Iraqi employment market is highly required since the high level of unemployment rate which achieves 13.74% in 2019 and the economic crisis from which Iraq suffers. Thus, this paper aims to investigate the technical efficiency levels of the Iraqi Labor market by referring to a set of Stochastic Frontier Analysis models (namely time-invariant models and time-variant models developed by Greene (2005)). The sample is decomposed from fifteen regions for the years extended from 2010 to 2013 and 2019 to 2020. The results provide interesting insights such as the low level of efficiency across Iraqi governorates. The results are explained by the geopolitical circumstances and socioeconomic crisis which have a tremendous impact on Iraqi market employment. After assessing the levels of technical efficiency, we turn our attention to panel data analysis of the employment market in which we proceed to Fixed Effect and Random Effect Models. The main results reveal a significant impact of work supply on the employment rate whereas unemployment does not have a significant effect.