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The Puzzle of Educated Unemployment in West Africa

Esther Mirjam Girsberger

Lunch-Seminar CIREQ-McGill
joint with the Department of Economics, McGill University

Leacock 429 (McGill University, 855 Sherbrooke West)

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.

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