The Promise and Peril of Youth Entrepreneurship in MENA

Caroline Krafft and Reham Rizk

No 1257, Working Papers from Economic Research Forum

Abstract: Entrepreneurship is promoted by government policies and international agencies as a solution to high rates of youth unemployment in the Middle East and North Africa. This paper investigates the potential for entrepreneurship to deliver on promises of alleviating unemployment. We specifically examine who entrepreneurs are (in comparison to the unemployed), their working conditions and earnings, and the dynamics of their occupational choices. We find that entrepreneurs, and especially the employers who are relatively more successful entrepreneurs and who can create jobs for others, are essentially the opposite of the unemployed. For example, entrepreneurs are older and less educated, while the unemployed are highly educated new entrants. Entrepreneurship does not generally lead to higher earnings, and does have fewer benefits. Thus, promoting entrepreneurship is not only unlikely to be successful in reducing unemployment, but also, if it is successful, may even be harmful to youth.

Pages: 64 pages
Date: 2018-11-19, Revised 2018-11-19
New Economics Papers: this item is included in nep-ara and nep-ent
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