Labour supply problems and solutions : econometric model for the State of Bahrain
Despite the intentions of the State of Bahrain to implement significant economic and social changes, and their full, or partial, sponsorship of intensive training programmes, neither have the human resources available been exploited to their full potential, nor have the vocational training programmes managed to equip unemployed workers with the skills needed to compete effectively in the labour market. Indeed, the picture is hardly encouraging for future generations, and cries out for fundamental changes. Bahrain has poured investments into projects aimed at reaping the benefits of its relative advantages, into exploring and transforming its oil and gas resources, into developing value added products, and human resources. But changes since have created a whole new world, with no market to speak of but a global one. Any decisions on investment should now be guided by the notion that geographical location is no longer a real issue, and that competition is won more by conceptual than by material advantage. A worker's personal opinion of his job has as much impact on competition as the extent and quality of his training. An entirely new system is therefore needed, one that provides social incentives and traditional rewards for the creation of new concepts, ideas and perspectives. The aim of this thesis, is firstly, to investigate labour supply in Bahrain in a dynamic setting in the light of the neoclassical theory which is based mainly on that labour supply is largely a function of real wage. Secondly, to diagnose the problems and finally to suggest solutions. An econometric model of labour supply for different groups: Bahrainis and non-Bahrainis, primary and secondary workers is introduced. Use is made of cross-section time series data. The econometric contribution of this thesis is the testing of relative wage theory besides the estimation and the identification of labour supply elasticities that can serve as the basis for policy decisions. Unemployment as the most serious economic problem facing Governments is considered in this thesis. Unemployment model is presented and analysed as a function of specific factors that may cause structural unemployment in the economy of Bahrain. Use is made of secondary data. Then unemployment policies are discussed and finally the conclusion of this thesis with prospects is presented.