Does the type of higher education affect labor market outcomes? Evidence from Egypt and Jordan

In Egypt and Jordan, there is a substantial mismatch between the output of the higher education system and the needs of the labor market. Both demand and supply-side factors could be driving this mismatch. This paper tests a key supply-side issue, whether differences in the institutional structures and incentives in higher education affect the labor market outcomes of graduates. Specifically, we ask if the stronger alignment of incentives in private relative to public higher education institutions produces more employable human capital and better labor market outcomes. We examine the impact of the type of higher education institution a person attends on several labor market outcomes while controlling for his or her pre-enrollment characteristics. The results demonstrate that supply-side issues and institutional incentives have little impact on labor market outcomes while family background plays by far the largest role. Proposed reforms for higher education often suggest increasing the role of the private sector in provision of higher education. Our findings indicate that this approach is unlikely to improve labor market outcomes.