Employment and skill mismatch among youth in Lebanon

• Pages: 1438-1457
• DOI: https://doi.org/10.1108/IJM-02-2018-0073
• Published date: 04 November 2019
• Date: 04 November 2019
• Author: Ghassan Dibeh,Ali Fakih,Walid Marrouch
• Subject Matter: Economics

Employment and skill mismatch

among youth in Lebanon

Ghassan Dibeh, Ali Fakih and Walid Marrouch

Department of Economics, Lebanese American University, Beirut, Lebanon

Abstract

Purpose –Employment and skill mismatch among youth constitute a major obstacle for access to the job

market in the Middle East and North African region. The purpose of this paper is to explore factors

explaining employment and the perception of the skill-mismatch problem among the youth in Lebanon using

a novel data set covering young people aged from 15 to 29. The paper provides a set of empirical insights that

help in the design of public policy targeting school-to-work transition.

Design/methodology/approach –The authors control for a rich set of youth and household characteristics

to jointly estimate the probability of being employed and the likelihood of reporting a skill-mismatch problem.

The empirical analysis uses a bivariate probit model where the first equation estimates the employment

status while the second estimates the determinants of skill-mismatch perceptions. The bivariate probit

model considers the error terms in both equations to be correlated and the model tests for such a

correlation. The authors estimate the model recursively by controlling for the employment dummy variable

in the skill-mismatch equation since employed youth could be more or less likely to perceive the skill

mismatch. The estimation is conducted first over the whole sample of youth, and then it is implemented by

gender and region.

Findings –The authors find that youth employment is mainly correlated with age, being male, being single,

having received vocational training and financial support from parents, living with parents and receiving

current education. The skill-mismatch perceptions are mainly driven by being male, being single, having

received post-secondary education and belonging to upper and middle social classes. The authors also

find that employability level and skill-mismatch problems are jointly determined in the labor market for males

and in the core region only.

Originality/value –The paper covers a country that is neglected in the literature on the employment-skill

mismatch nexus in the context of school-to-work transition. The study also uses a novel data set focusing on

youth. The paper contributes to our understanding of the school-to-work transition in particular and to the

youth-to-adulthood transition in general.

Keywords Employment, Youth, Skill mismatch, School-to-work transition, Bivariate probit model

Paper type Research paper

1. Introduction

Skill mismatch has been identified to impose a significance drag on economic growth and

employment across the Middle East and North Africa (MENA), a region that has a large

youthful population compared to other economic regions (Bhattacharya and Wolde, 2012;

Fakih and Ghazalian, 2015). The skill-mismatch problem arises when there is a divergence

between the educational attainment of workers and the skill requirements of prospective

jobs (Kiker et al., 1997). Moreover, employability is commonly related to a number of labor

supply-side constraints or attributes, which adversely affect the ability of new young job

entrants to find jobs in a timely fashion (Fugate et al., 2004). These constraints relate to

socio-economic characteristics of youth (e.g. age, gender, education and class) and regional

specificities (Pool and Sewell, 2007).

In the context of MENA economies, the labor market in Lebanon represents an

interesting case on the potential implications of skill-mismatch problems on youth

transition from school to work. In Lebanon, higher education institutions produce a large

number of graduates that are not absorbed by the labor market (OECD, 2015) and the

proportion of the young working in jobs that do not correspond to their educational

backgrounds is significant. In this respect, only 40 percent of graduates work in jobs that

match their qualifications while 20 percent of those work in non-matching occupations

International Journal of Manpower

Vol. 40 No. 8, 2019

pp. 1438-1457

© Emerald PublishingLimited

0143-7720

DOI 10.1108/IJM-02-2018-0073

Received 23 February 2018

Revised 3 June 2018

2 January 2019

8 March 2019

Accepted 14 March 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0143-7720.htm

1438

IJM

40,8

(Kawar and Tzannatos, 2013). Furthermore, ethnographic evidence suggests that a large

number of Lebanese youth are pursuing careers that ar e unrelated to their academic

studies (NCS, 2016)[1] (Table I).

Such a state of the labor market can have significant economic and social impacts.

It has been shown that a sequential schooling system coupled with a fragile integration of

educational systems and labor markets can result in possible “experience trap,”incompetent

human capital formation and protracted school-to-work transition (Caroleo and Pastore,

2016; Pastore, 2018).

The main purpose of our paper is to test the determinants of both employability and the

skill-mismatch problem among youth in Lebanon, which are assumed jointly determined in

the labor market. The paper implements a bivariate probit model to jointly estimate the

probability of being employed and the likelihood of reporting a skill-mismatch problem.

Two equations are estimated; the first equation estimates the employment status while the

second estimates the determinants of skill-mismatch perceptions. The bivariate probit

model considers the error terms in both equations to be correlated and the model tests for

such a correlation. We estimate the model recursively by controlling for the employment

dummy variable in the skill-mismatch equation since employed youth could be more or less

likely to perceive the skill mismatch. The estimation controls for a number of relevant youth

and household characteristics.

To the best of our knowledge, besides a number of policy reports (e.g. Robalino and

Sayed, 2012), our work is the first empirical paper that examines this question in Lebanon.

In this respect, our paper adds to the growing literature on school-to-work transition in

developing countries and particularly in MENA countries (Angel-Urdinola and Semlali,

2010; Assaad and Krafft, 2014, Selwaness and Roushdy, 2019).

The paper is organized as follows. Section 2 summarizes the related literature on the

employment-skill mismatch nexus and work-to-school transition in developing countries.

Section 3 presents the data, the main variables, summary statistics and the empirical

methodology. Section 4 discusses the empirical results. Finally, Section 5 provides some

concluding remarks.

2. Related literature

Factors affecting employability and skill mismatch have been studied in various labor

market settings (Houston, 2005). The two problems constitute a significant constraint

especially those young higher education graduates seeking to participate in the labor force.

This constraint is especially acute in the MENA region that has seen a number of youth

agitations during the period of the Arab Spring. Existing studies report variations across

Youth labor force

participation rate

Youth to adult

unemployment rate

Youth employment to

population ratio

Lebanon 29.1 5.2 22.9

Middle East 31.4 3.7 23.2

North Africa 34.0 3.5 24.7

World 48.5 2.9 42.3

OECD countries 48.4 2.5 40.7

East Asia 55.7 2.9 50.3

South-East Asia and the Pacific 52.9 5.4 45.3

South Asia 42.6 3.8 38.4

Latin America and the Caribbean 52.9 2.9 45.3

Sub-Saharan Africa 54.3 2.0 47.7

Source: Key Indicators of the Labour Market (KILM) 2015 of the International Labour Organization

Table I.

Youth labor market

indicators by

economic region

(averages, 2005–2015)

1439

Employment

and skill

mismatch