## 1. Labor Market Trends in Jordan

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---

### Background
- Jordan has nearly 98 percent female literacy.
- Female tertiary enrollment in 2019: 36 percent female enrollment versus 30 percent male enrollment.
- Fertility rates: 2.7 in 2019; 3.7 in 2009; 4.1 in 2000.
- Maternity deaths: 46 deaths per 100,000 live births.
- Average female labor force participation rate, 2009–19: around 14 percent; male participation, 2009–19: 62 percent.
- Average unemployment rates, 2009–19: females 23 percent; males 12 percent.
- Comparative female participation: middle income countries average 46 percent for 2009–19; MENAP region 20 percent.
- COVID-19 impacts:
  - 2021Q4 female unemployment rate: 31 percent.
  - 2021Q4 female labor force participation: 13.6 percent.
  - At pandemic onset about one in three working women lost their job (study cited).
  - Young females (aged 15–24) unemployment almost 67 percent (average participation rate 30 percent); reached 85 percent in 2020Q4.
- Figures and time series sources: Jordan Department of Statistics, IMF staff calculations.

### Determinants of low female participation (relevant literature and studies)
- Primary determinants identified:
  - Structural barriers: demographics, education, access to suitable infrastructure.
  - Unfavorable policies: labor market regulation, tax and transfer systems.
  - Legal barriers: basic and financial legal rights.
- Labor market dynamics:
  - Low private-sector job creation and diminishing public sector opportunities constrain female employment; public sector jobs are more desirable for females due to greater flexibility.
  - Sectoral concentration: women predominate in education (63 percent) and health and social work (61 percent), sectors that are saturated and typically offer lower wages.
- Social norms and childcare:
  - World Bank survey: 96 percent agree it is acceptable for women to work, but nearly half find it unacceptable if job necessitates leaving children with relatives; over 70 percent oppose jobs requiring return after 5 PM.
  - Lack of affordable childcare contributes to half of women exiting workforce after age 30.
  - UN Women (2017): average childcare costs as share of women’s median wages range from 123 percent (primary school degrees) to 77 percent (university graduates).
- Transportation constraints:
  - ILO estimate: lack of safe, reliable public transport reduces female participation probability by 16.5 percent.
  - 47 percent of women surveyed have turned down job opportunities due to public transportation state.
  - Average commute for Jordanian working women: 48 minutes; average transport cost JD 57 per month.
  - World Bank survey: longest acceptable commute time 32 minutes on average; around 44 percent think women may face harassment commuting or at work.
- Legal restrictions and financial control:
  - World Bank “Women, Business and the Law 2022” index: Jordan score 46.9 out of 100 versus MENA regional average 53.
  - Jordan scored 0 out of 100 on laws and regulations affecting women in the workplace (no legislation deterring gender-based discrimination in hiring nor protecting against harassment).
  - World Bank estimated private sector wage gap in 2020 for similar jobs: approximately 17 percent in favor of men.
  - Example wages: male legislators/senior officials/managers average JD 1,503 per month; women in same positions JD 963.
  - Only 27 percent of Jordanian women have their own bank account (Central Bank of Jordan, Financial Inclusion Report 2018–20).

### Methodology and results (empirical approach)
- Estimation approach:
  - Maximum likelihood estimator used to examine four factor types: structural (fertility, education, GDP per capita), infrastructure (access to electricity, drinking water, sanitation services, childcare), public policies (retirement age, taxes, social security transfers), and regulation (labor market legislation, basic legal rights, financial-related legal rights).
  - Indices constructed between 0 and 1 for each dimension (higher value = more favorable conditions for female labor force participation and employment). Regression framework applied to quantify each index’s role in determining labor market gender gaps.
  - Robustness: fixed effect model, OLS, first differences, bootstrap regressions employed and confirmatory tests conducted.
- Key empirical conclusion:
  - Structural variables and regulations are the main drivers of the gender gap in participation and employment outcomes in Jordan; statistically significant relationships found for these dimensions.
- Note on indices construction: follows World Bank “Women, Business, and Law” methodology; sub-indicators standardized between 0 and 1, unweighted average taken and scaled to 100, with higher value pointing to less favorable conditions for female labor force participation and employment rates.
- Regression diagnostics: all coefficients have the expected sign except infrastructure index for MENA (possibly due to high correlation with structural index).

### Policy directions implied by analysis
- Address structural impediments to female participation:
  - Facilitate private-sector job creation; diversify sectors employing women beyond education and health.
- Reform legal and regulatory framework:
  - Prohibit gender-based discrimination in hiring; protect against harassment.
- Improve access to affordable childcare:
  - Reduce exits from labor force after childbearing years.
- Enhance safe, reliable, and affordable public transportation:
  - Expand women’s geographic access to jobs.
- Tackle wage gaps and barriers to women’s financial autonomy:
  - Increase access to bank accounts and financial rights.

---

### 14. Based on the results of the analysis, structural reforms to enhance female employment

#### Rationale and potential gains
- Complementarity of skills can raise productivity in the workplace: women tend to be more organized and less risk averse as compared to men.
- Evidence cited: "Sahay and Čihák (2018) found that banks with gender-diverse boards had greater financial sustainability, higher capital buffers, and lower NPLs."
- Potential GDP gain: closing the gender gap could create a one-off increase in Jordan’s GDP by roughly 45 percent (Cuberes and Teignier, 2014).

#### Empirical results (indices and estimated associations)
- Regression-like summary (coefficients and standard errors as presented):
  - Structural: 1.153*** 0.489* 0.232*** 0.078  
    (0.356) (0.290) (0.080) (0.083)
  - Infrastructure: 0.223 0.103 ‐0.166*** ‐0.189***  
    (0.372) (0.303) (0.033) (0.034)
  - Public Policy: 0.025 0.020 0.115*** 0.092***  
    (0.042) (0.034) (0.027) (0.028)
  - Regulations: 0.611*** 0.568*** 0.122*** 0.158***  
    (0.210) (0.171) (0.033) (0.035)
- Sample and significance notes:
  - Observations: 1818 1051 105
  - Number of countries: 1199
  - Standard errors in parentheses
  - *** p<0.01, ** p<0.05, * p<0.1
- Outcomes indicated (columns as in source): Jordan Female‐to‐Male Labor Force Participation; Jordan Female‐to‐Male Employment; MENA Female‐to‐Male Labor Force Participation; MENA Female‐to‐Male Employment

#### Policy recommendations (based on analysis)
- Improving the regulatory framework:
  - Passing amendments to Labor Law that protect women from harassment and remove gender biased articles.
  - Ensuring adequate access to maternity and paternity leave benefits and destigmatizing its utilization.
  - Addressing pay disparity including by enforcing the recently passed legislations on anti-discrimination in pay.
  - Raising awareness around dual income sources for families as an attractive option.
- Ensuring adequate access to infrastructure, including childcare facilities and public transport:
  - Continue efforts on improving access to childcare and lowering the costs of nurseries.
  - Note: recent Government of Jordan efforts on the nurseries licensing bylaw and review of the regulatory institutional model, and providing cash support for nurseries in areas with low female labor force participation through the Social Security Corporation are welcome but more is needed to increase awareness of benefits and availability.
  - Greater provision of early childhood care and education service centers can create job opportunities for other women in those facilities.
  - Improve access to public transportation with emphasis on reliability, safety, and cost.
  - Operationalization of the Bus Rapid Transit (BRT) is a step in the right direction but "does not sufficiently address the significant gap in the market."
- Improving the business and investment environment to stimulate jobs-rich growth in the private sector:
  - Bolster private sector growth to expand opportunities available for women (away from limited positions in the public sector).
  - Foster growth in knowledge-intensive business and service sectors where flexible work arrangements and hours are feasible to help increase participation and employment.

#### Data limitations and qualitative notes
- Data availability limits inclusion of a measure reflecting access to and quality of public transport; anecdotal evidence, field-based surveys, and conversations with government employees and local stakeholders highlighted challenges facing women in Jordan in this sphere.

#### Variables included in the indices (as defined)
- Structural:
  - GDP per capita: Log of GDP per capita (constant 2010 US$)
  - Average schooling: Average years of schooling, female
  - Fertility rate: Total births per woman
- Infrastructure:
  - Access to electricity: Access to electricity, rural (% of rural population)
  - Access to drinking water: People using at least basic drinking water services, rural (% of rural population)
  - Access to sanitation: People using at least basic sanitation services, rural (% of rural population)
  - Access to childcare: School enrollment, preprimary (% gross)
- Public Policy:
  - Maternity benefits: 1 if government administers 100% of maternity leave benefits, otherwise 0
  - Full pension retirement: 1 if ages at which men and women can retire with full pension benefits are equal, otherwise 0
  - Partial pension retirement: 1 if ages at which men and women can retire with partial pension benefits are equal, ptherwise 0
  - Retirement age: 1 if mandatory retirement age for men and women are equal, otherwise 0
  - Childcare absence in pension: 1 if periods of absence due to child care are accounted for in pension benefits, otherwise 0
  - Top marginal income tax rate: Countries with higher marginal tax rates that take effect at lower income thresholds receive lower ratings
  - Transfers and subsidies: Lower rating for countries with large transfers
- Regulations:
  - Choose where to live: 1 if woman can choose where to live in the same way as a man, otherwise 0
  - Domestic violence legislation: 1 if there is legislation specifically addressing domestic violence, otherwise 0
  - Signing contracts: 1 if a woman can sign a contract same way as a man, otherwise 0
  - Registering businesses: 1 if a woman can register a business same way as a man, otherwise 0
  - Access to credit: 1 if law prohibits gender discrimination in access to credit, otherwise 0
  - Access to bank accounts: 1 if a woman can open a bank account in same way as a man, otherwise 0
  - Spousal property rights: 1 if men and married women have equal ownership rights to property, otherwise 0
  - Inheritance: 1 if sons and daughters have equal rights to inherit assets from their parents, otherwise 0
  - Spousal inheritance: 1 if surviving spouses have equal rights to inherit assets, otherwise 0
  - Spousal authority over assets: 1 if the law grants spouses equal administrative authority over assets during marriage, otherwise 0
  - Valuation of nonmonetary contributions: 1 if the law provides for the valuation of nonmonetary contributions, otherwise 0
  - Get a job same as man: 1 if a woman can get a job in the same way as a man, otherwise 0
  - Gender discrimination in employment: 1 if the law prohibits discrimination based on gender in employment, otherwise 0
  - Sexual harrassment legislation: 1 if there is legislation on sexual harassment in employment, otherwise 0
  - Penalties for sexual harrassment: 1 if there are criminal penalties or civil remedies for sexual harassment in employment, otherwise 0
  - Equal pay for equal work: 1 if the law mandates equal remuneration for work of equal value, otherwise 0
  - Limits on night hours: 1 if women can work the same night hours as men, otherwise 0
  - Limits on jobs deemed dangerous: 1 if women can work in jobs deemed dangerous in the same way as men, otherwise 0
  - Limits on industries: 1 if women are able to work in the same industries as men, otherwise 0
  - Paternal leave: 1 if there is paid parental leave, otherwise 0
  - Dismissal of pregnant workers: 1 if dismissal of pregnant workers prohibited, otherwise 0

---

### 4. Private consumption has been the largest contributor to growth, even more so today

#### Private consumption and expenditure composition
- The share of private consumption in total GDP is about 80 percent of GDP in Jordan, much higher than its MENA peers (about 60 percent of GDP on average).
- High private consumption was largely sustained despite slower growth after the GFC, mostly attributable to the high rate of population growth following the influx of Syrian refugees into Jordan in 2011.
- Growth of government spending has been very modest after the GFC, primarily due to fiscal consolidation measures undertaken to contain public debt.
- Given already elevated levels of debt, continued consumption growth is unlikely to be the main driver of growth going forward.
- Tourism, transport and ICT, and chemicals jointly contribute to over 50 percent of total exports.

#### Investment dynamics
- Gross capital formation (GCF) was trending upward during 2000–08, driven by substantial inflows of FDI.
- FDI’s share of GDP increased from 2.5 percent in 2002 to 23.5 percent of GDP in 2006.
- Investment growth declined from 32 percent during the period 2000–08 to -22 percent during the period 2011–19 due to multiple exogenous shocks, regional instability, and large swings in oil prices.
- Investment’s share in GDP declined from 39 percent in 2008 to 24 percent in 2019.
- The sharp decline in capital accumulation risks hindering Jordan’s growth potential over the medium and long term.

#### Trade, exports, and economic complexity
- Jordan’s trade linkages expanded rapidly in the 2000s, but both export and import growth have slowed significantly since the GFC and the collapse of trade with Iraq and Syria.
- The complexity of the economy declined sharply after the GFC; economic complexity is linked to accumulation of productive knowledge and predictive of future growth.
- Jordan’s small domestic market means future growth hinges crucially on the ability to compete internationally.

#### Growth accounting and total factor productivity (TFP)
- A Cobb-Douglas production function with trend labor, capital, and TFP estimated using a Hodrick-Prescott filter was used to estimate potential output.
- Growth pre-GFC was driven by robust growth in TFP and capital accumulation.
- After the GFC, TFP growth declined drastically—particularly amid the cutoff of Egyptian gas supply and border closures—while capital accumulation also slowed as fiscal space narrowed.
- Growth after the GFC was initially driven by rapid population growth but rising Jordanian unemployment starting in 2015 dampened employment growth; COVID-19 further damaged the labor market.
- Potential GDP growth has slowed substantially from around 6 percent before the GFC to only 2 percent currently.
- TFP growth turned positive in recent years.

#### Labor productivity, sectoral patterns, and firm-level TFP
- Aggregate labor productivity growth has been low since 2008, with a pick-up in 2018–19 before the pandemic.
- Labor productivity is measured as value added divided by number of Jordanian workers.
- Labor remains concentrated in low-productivity and non-growing service sectors:
  - The public sector, other services (community, social, personal, household and non-profit services), and wholesale/retail represent half of total Jordanian employment but have relatively low labor productivity.
  - The share of higher-productivity sectors (finance, agriculture, transportation) did not increase from 2011 to 2019, while workers migrated to low-productivity sectors (other services).
- Non-Jordanian employment concentration:
  - Some studies estimate the share of non-Jordanians in the informal sector is as high as 85 percent in 2017.
  - Jordan Labor Force Survey in 2021Q4: 43 percent and 12 percent of non-Jordanians work in other household service activities and construction sector, respectively.
- Firm-level TFP (Orbis database, 2000–19):
  - Firm-level TFP was very high during 2002–10 across almost all industries but slowed significantly during 2011–19.
  - During 2011–19, transportation, real estate and finance saw sharp declines in productivity growth; manufacturing, mining, and ICT experienced some positive TFP growth.

#### Post-COVID growth strategy and Economic Modernization Vision
- Pandemic effects: exacerbated weak growth momentum and raised scarring risks via debt overhang and fiscal consolidation, persistent weakness in high contact-intensive sectors, loss of schooling, and loss of high-skill expatriates.
- Economic Modernization Vision (early June 2022):
  - Developed through participation of more than 500 specialists, stakeholders and representatives.
  - Implementation in 3 phases over a period of 10 years to create employment opportunities and raise standards of living.
  - Targets: boosting real GDP growth rate to 5.6 percent per year and creating one million employment opportunities by 2033.
  - Strategic goals by end of 2033 include: creating one million economic opportunities by 2033; increasing the real income per capita by an average of 3 percent per year; improving several global index rankings to specified percentiles.
  - Eight main driver areas: (i) High Value Industries; (ii) Future Services; (iii) Destination Jordan; (iv) Smart Jordan; (v) Sustainable Resources; (vi) Invest Jordan; (vii) Green Jordan; (viii) Vibrant Jordan.
  - Estimated overall investment required: about JD 41 billion in the next 10 years.
  - Financing: about 72 percent of the investment is expected to be mobilized from the private sector and the remaining 28 percent will come from the government’s budget, with support from donors.

#### Cross-cutting bottlenecks and priority policy actions
- Key constraints: innovation and macroeconomic environment in the Global Competitiveness Index; businesses cite tax administration and electricity costs as main constraints.
- Reforms and measures:
  - Reducing costs of doing business, particularly electricity costs and tax administration burdens:
    - New electricity tariffs rolled out on April 1, 2022 will reduce electricity tariffs by 13 percent on average for the corporate sector.
    - Reforms to streamline tax rules and incentives under the EFF aim to simplify and improve tax administration efficiency.
  - Mobilizing financing for digital infrastructure and climate adaptation:
    - Digital and ICT infrastructure and climate adaptation require large investments; participation of private sector and external donors will be needed.
    - Strengthening governance and transparency to attract FDI and mobilize private and donor financing.
    - The PPP law and the new legislation on investment climate will reduce policy unpredictability and investment risks.
  - Promoting labor market flexibility and participation:
    - Facilitate labor reallocations from public sector and low-productivity services to more productive sectors.
    - Incentives include removing gender-biased articles from labor legislation and providing job training.
    - Need to attract entrepreneurs and skilled workers for priority sectors such as professional business services, tourism, and logistics.
  - Increasing firm dynamism by enhancing competition:
    - Remove policy distortions that lead to resource misallocation (industry subsidies, size-dependent policies, subsidies to state-owned enterprises).
    - Remove barriers to entry, strengthen competition and anti-corruption frameworks, streamline licensing, and reduce the economic footprint of the state.
    - A new competition law is being drafted.

*Source: 1jorea2022004 - IMF staff analysis (chapter texts).*

### 1. Labor Market Trends in Jordan _______________________________________________________ 4

### 1. Labor Market Trends in Jordan

### Background
- Jordan has nearly 98 percent female literacy, outperforming the MENA regional average (around 80 percent).
- Female tertiary enrollment in 2019: 36 percent female enrollment versus 30 percent male enrollment.
- Fertility rates: 2.7 in 2019; 3.7 in 2009; 4.1 in 2000.
- Maternity deaths: 46 deaths per 100,000 live births.
- Average female labor force participation rate, 2009–19: around 14 percent; male participation, 2009–19: 62 percent.
- Average unemployment rates, 2009–19: females 23 percent; males 12 percent.
- Comparative female participation: middle income countries average 46 percent for 2009–19; MENAP region 20 percent.
- COVID-19 impacts:
  - 2021Q4 female unemployment rate: 31 percent.
  - 2021Q4 female labor force participation: 13.6 percent.
  - At pandemic onset about one in three working women lost their job (study cited).
  - Young females (aged 15–24) unemployment almost 67 percent (average participation rate 30 percent); reached 85 percent in 2020Q4.
- Note: Figures and time series shown in the chapter (sources: Jordan Department of Statistics, IMF staff calculations).

### Relevant Literature and Studies — determinants of low female participation
- Primary determinants identified in literature:
  - Structural barriers: demographics, education, access to suitable infrastructure.
  - Unfavorable policies: labor market regulation, tax and transfer systems.
  - Legal barriers: basic and financial legal rights.
- Low private-sector job creation and diminishing public sector opportunities constrain female employment; public sector jobs are more desirable for females due to greater flexibility.
- Sectoral concentration: women predominate in education (63 percent) and health and social work (61 percent), sectors that are saturated and typically offer lower wages.
- Social norms and childcare:
  - World Bank survey: 96 percent agree it is acceptable for women to work, but constraints exist (e.g., nearly half find it unacceptable if job necessitates leaving children with relatives; over 70 percent oppose jobs requiring return after 5 PM).
  - Lack of affordable childcare contributes to half of women exiting workforce after age 30.
  - UN Women (2017): average childcare costs as share of women’s median wages range from 123 percent (primary school degrees) to 77 percent (university graduates).
- Transportation constraints:
  - ILO estimate: lack of safe, reliable public transport reduces female participation probability by 16.5 percent.
  - 47 percent of women surveyed have turned down job opportunities due to public transportation state.
  - Average commute for Jordanian working women: 48 minutes; average transport cost JD 57 per month.
  - World Bank survey: longest acceptable commute time 32 minutes on average; around 44 percent think women may face harassment commuting or at work.
- Legal restrictions:
  - World Bank “Women, Business and the Law 2022” index: Jordan score 46.9 out of 100 versus MENA regional average 53.
  - Jordan scored 0 out of 100 on laws and regulations affecting women in the workplace (no legislation deterring gender-based discrimination in hiring nor protecting against harassment).
- Pay and control over finances:
  - World Bank estimated private sector wage gap in 2020 for similar jobs: approximately 17 percent in favor of men.
  - Example: male legislators/senior officials/managers average JD 1,503 per month; women in same positions JD 963.
  - Only 27 percent of Jordanian women have their own bank account (Central Bank of Jordan, Financial Inclusion Report 2018–20).

### Methodology and Results
- Empirical approach:
  - Maximum likelihood estimator used to examine four factor types: structural (fertility, education, GDP per capita), infrastructure (access to electricity, drinking water, sanitation services, childcare), public policies (retirement age, taxes, social security transfers), and regulation (labor market legislation, basic legal rights, financial-related legal rights).
  - Indices constructed between 0 and 1 for each dimension (higher value = more favorable conditions for female labor force participation and employment). Regression framework applied to quantify each index’s role in determining labor market gender gaps.
  - Robustness: fixed effect model, OLS, first differences, bootstrap regressions employed and confirmatory tests conducted.
- Key empirical conclusion:
  - Structural variables and regulations are the main drivers of the gender gap in participation and employment outcomes in Jordan; statistically significant relationships found for these dimensions.
- Note on indices construction: follows World Bank “Women, Business, and Law” methodology; sub-indicators standardized between 0 and 1, unweighted average taken and scaled to 100, with higher value pointing to less favorable conditions for female labor force participation and employment rates.
- Note on regression diagnostics: all coefficients have the expected sign except infrastructure index for MENA (possibly due to high correlation with structural index).

### Policies to Boost Female Employment and Participation Opportunities
- Rationale:
  - Increasing female labor force participation and employment can significantly boost GDP, productivity, and tax collections.
  - Evidence: inclusion of more females in the workplace can boost productivity and incomes; gains in economic welfare in MENA exceed 20 percent (Ostry and others, 2018).
  - Estimated regional income loss due to low female participation: approximately 38 percent for MENA (Cuberes and Teignier, 2014; Cuberes, Newiak and Teignier, 2016).
- Policy directions implied by analysis (derived from findings):
  - Address structural impediments to female participation (facilitate private-sector job creation; diversify sectors employing women beyond education and health).
  - Reform legal and regulatory framework to prohibit gender-based discrimination in hiring and protect against harassment.
  - Improve access to affordable childcare to reduce exits from labor force after childbearing years.
  - Enhance safe, reliable, and affordable public transportation to expand women’s geographic access to jobs.
  - Tackle wage gaps and barriers to women’s financial autonomy (e.g., increase access to bank accounts and financial rights).

*Source: 1jorea2022004 - 1. Labor Market Trends in Jordan (June 15, 2022), IMF.*

### 14. Based on the results of the analysis, structural reforms to enhance female employment

### 14. Based on the results of the analysis, structural reforms to enhance female employment

### Rationale and potential gains
- Complementarity of skills can raise productivity in the workplace: women tend to be more organized and less risk averse as compared to men, which can lead to positive outcomes for companies.
- Evidence cited: "Sahay and Čihák (2018) found that banks with gender-diverse boards had greater financial sustainability, higher capital buffers, and lower NPLs."
- The potential gains from increasing the participation of women in the economy to the level of men, essentially closing the gender gap, could create a one-off increase in Jordan’s GDP by roughly 45 percent (Cuberes and Teignier, 2014).

### Empirical results (indices and estimated associations)
- Regression-like summary (coefficients and standard errors shown as in source):
  - Structural: 1.153*** 0.489* 0.232*** 0.078  
    (0.356) (0.290) (0.080) (0.083)
  - Infrastructure: 0.223 0.103 ‐0.166*** ‐0.189***  
    (0.372) (0.303) (0.033) (0.034)
  - Public Policy: 0.025 0.020 0.115*** 0.092***  
    (0.042) (0.034) (0.027) (0.028)
  - Regulations: 0.611*** 0.568*** 0.122*** 0.158***  
    (0.210) (0.171) (0.033) (0.035)
- Sample and significance notes:
  - Observations: 1818 1051 105
  - Number of countries: 1199
  - Standard errors in parentheses
  - *** p<0.01, ** p<0.05, * p<0.1
- Outcomes indicated (columns as in source): Jordan Female‐to‐Male Labor Force Participation; Jordan Female‐to‐Male Employment; MENA Female‐to‐Male Labor Force Participation; MENA Female‐to‐Male Employment

### Policy recommendations (based on analysis)
- Improving the regulatory framework:
  - Passing amendments to Labor Law that protect women from harassment and remove gender biased articles.
  - Ensuring adequate access to maternity and paternity leave benefits and destigmatizing its utilization.
  - Addressing pay disparity including by enforcing the recently passed legislations on anti-discrimination in pay.
  - Raising awareness around dual income sources for families as an attractive option.
- Ensuring adequate access to infrastructure, including childcare facilities and public transport:
  - Continue efforts on improving access to childcare and lowering the costs of nurseries.
  - Note: recent Government of Jordan efforts on the nurseries licensing bylaw and review of the regulatory institutional model, and providing cash support for nurseries in areas with low female labor force participation through the Social Security Corporation are welcome but more is needed to increase awareness of benefits and availability.
  - Greater provision of early childhood care and education service centers can create job opportunities for other women in those facilities.
  - Improve access to public transportation with emphasis on reliability, safety, and cost.
  - Operationalization of the Bus Rapid Transit (BRT) is a step in the right direction but "does not sufficiently address the significant gap in the market."
- Improving the business and investment environment to stimulate jobs-rich growth in the private sector:
  - Bolster private sector growth to expand opportunities available for women (away from limited positions in the public sector).
  - Foster growth in knowledge-intensive business and service sectors where flexible work arrangements and hours are feasible to help increase participation and employment.

### Data limitations and qualitative notes
- While data availability impacts the ability of the analysis to include a measure reflecting access to and quality of public transport, anecdotal evidence, field-based surveys, and conversations with government employees and local stakeholders highlighted challenges facing women in Jordan in this sphere.

### Variables included in the indices (as defined in source)
- Structural:
  - GDP per capita: Log of GDP per capita (constant 2010 US$)
  - Average schooling: Average years of schooling, female
  - Fertility rate: Total births per woman
- Infrastructure:
  - Access to electricity: Access to electricity, rural (% of rural population)
  - Access to drinking water: People using at least basic drinking water services, rural (% of rural population)
  - Access to sanitation: People using at least basic sanitation services, rural (% of rural population)
  - Access to childcare: School enrollment, preprimary (% gross)
- Public Policy:
  - Maternity benefits: 1 if government administers 100% of maternity leave benefits, otherwise 0
  - Full pension retirement: 1 if ages at which men and women can retire with full pension benefits are equal, otherwise 0
  - Partial pension retirement: 1 if ages at which men and women can retire with partial pension benefits are equal, ptherwise 0
  - Retirement age: 1 if mandatory retirement age for men and women are equal, otherwise 0
  - Childcare absence in pension: 1 if periods of absence due to child care are accounted for in pension benefits, otherwise 0
  - Top marginal income tax rate: Countries with higher marginal tax rates that take effect at lower income thresholds receive lower ratings
  - Transfers and subsidies: Lower rating for countries with large transfers
- Regulations:
  - Choose where to live: 1 if woman can choose where to live in the same way as a man, otherwise 0
  - Domestic violence legislation: 1 if there is legislation specifically addressing domestic violence, otherwise 0
  - Signing contracts: 1 if a woman can sign a contract same way as a man, otherwise 0
  - Registering businesses: 1 if a woman can register a business same way as a man, otherwise 0
  - Access to credit: 1 if law prohibits gender discrimination in access to credit, otherwise 0
  - Access to bank accounts: 1 if a woman can open a bank account in same way as a man, otherwise 0
  - Spousal property rights: 1 if men and married women have equal ownership rights to property, otherwise 0
  - Inheritance: 1 if sons and daughters have equal rights to inherit assets from their parents, otherwise 0
  - Spousal inheritance: 1 if surviving spouses have equal rights to inherit assets, otherwise 0
  - Spousal authority over assets: 1 if the law grants spouses equal administrative authority over assets during marriage, otherwise 0
  - Valuation of nonmonetary contributions: 1 if the law provides for the valuation of nonmonetary contributions, otherwise 0
  - Get a job same as man: 1 if a woman can get a job in the same way as a man, otherwise 0
  - Gender discrimination in employment: 1 if the law prohibits discrimination based on gender in employment, otherwise 0
  - Sexual harrassment legislation: 1 if there is legislation on sexual harassment in employment, otherwise 0
  - Penalties for sexual harrassment: 1 if there are criminal penalties or civil remedies for sexual harassment in employment, otherwise 0
  - Equal pay for equal work: 1 if the law mandates equal remuneration for work of equal value, otherwise 0
  - Limits on night hours: 1 if women can work the same night hours as men, otherwise 0
  - Limits on jobs deemed dangerous: 1 if women can work in jobs deemed dangerous in the same way as men, otherwise 0
  - Limits on industries: 1 if women are able to work in the same industries as men, otherwise 0
  - Paternal leave: 1 if there is paid parental leave, otherwise 0
  - Dismissal of pregnant workers: 1 if dismissal of pregnant workers prohibited, otherwise 0

*Source: IMF staff analysis as presented in the chapter "14. Based on the results of the analysis, structural reforms to enhance female employment."*

### 4.      Private consumption has been the largest contributor to growth, even more so today

### 4.      Private consumption has been the largest contributor to growth, even more so today

### Private consumption and expenditure composition
- The share of private consumption in total GDP is about 80 percent of GDP in Jordan, much higher than its MENA peers (about 60 percent of GDP on average).
- High private consumption was largely sustained despite slower growth after the GFC, mostly attributable to the high rate of population growth following the influx of Syrian refugees into Jordan in 2011.
- Growth of government spending has been very modest after the GFC, primarily due to fiscal consolidation measures undertaken to contain public debt.
- Given already elevated levels of debt, continued consumption growth is unlikely to be the main driver of growth going forward.
- Tourism, transport and ICT, and chemicals jointly contribute to over 50 percent of total exports.

### Investment dynamics
- Gross capital formation (GCF) was trending upward during 2000–08, driven by substantial inflows of FDI.
- FDI’s share of GDP increased from 2.5 percent in 2002 to 23.5 percent of GDP in 2006.
- Investment growth declined from 32 percent during the period 2000–08 to -22 percent during the period 2011–19 due to multiple exogenous shocks, regional instability, and large swings in oil prices.
- Investment’s share in GDP declined from 39 percent in 2008 to 24 percent in 2019.
- The sharp decline in capital accumulation risks hindering Jordan’s growth potential over the medium and long term.

### Trade, exports, and economic complexity
- Jordan’s trade linkages expanded rapidly in the 2000s, but both export and import growth have slowed significantly since the GFC and the collapse of trade with Iraq and Syria.
- The complexity of the economy declined sharply after the GFC; economic complexity is linked to accumulation of productive knowledge and predictive of future growth.
- Jordan’s small domestic market means future growth hinges crucially on the ability to compete internationally.

### Growth accounting and total factor productivity (TFP)
- A Cobb-Douglas production function with trend labor, capital, and TFP estimated using a Hodrick-Prescott filter was used to estimate potential output.
- Growth pre-GFC was driven by robust growth in TFP and capital accumulation.
- After the GFC, TFP growth declined drastically—particularly amid the cutoff of Egyptian gas supply and border closures—while capital accumulation also slowed as fiscal space narrowed.
- Growth after the GFC was initially driven by rapid population growth but rising Jordanian unemployment starting in 2015 dampened employment growth; COVID-19 further damaged the labor market.
- Potential GDP growth has slowed substantially from around 6 percent before the GFC to only 2 percent currently.
- TFP growth turned positive in recent years, which is a positive indication for future growth if sustained.

### Labor productivity, sectoral patterns, and firm-level TFP
- Aggregate labor productivity growth has been low since 2008, with a pick-up in 2018–19 before the pandemic.
- Labor productivity is measured as value added divided by number of Jordanian workers; the trend inclusive of non-Jordanians could be even weaker given rapid expansion of the non-Jordanian population since 2011.
- Decomposition analysis (Fabricant variant) shows three components: within-effect (sector productivity changes), structural change (labor reallocation across sectors), and cross/interaction term.
- Labor remains concentrated in low-productivity and non-growing service sectors, dragging down aggregate productivity growth:
  - The public sector, other services (community, social, personal, household and non-profit services), and wholesale/retail represent half of total Jordanian employment but have relatively low labor productivity.
  - The share of higher-productivity sectors (finance, agriculture, transportation) did not increase from 2011 to 2019, while workers migrated to low-productivity sectors (other services).
- Non-Jordanian employment concentration:
  - Some studies estimate the share of non-Jordanians in the informal sector is as high as 85 percent in 2017.
  - According to the Jordan Labor Force Survey in 2021Q4, 43 percent and 12 percent of non-Jordanians work in other household service activities and construction sector, respectively.
- Firm-level TFP (Orbis database, 2000–19; methodology from Gandhi, Navarro and Rivers, 2020):
  - Firm-level TFP was very high during 2002–10 across almost all industries but slowed significantly during 2011–19.
  - During 2011–19, transportation, real estate and finance saw sharp declines in productivity growth; manufacturing, mining, and ICT experienced some positive TFP growth.
  - The unfavorable micro evidence confirms weak aggregate productivity growth and suggests a slowdown of technological, product and process innovations in Jordan’s corporate sector.

### Post-COVID growth strategy and Economic Modernization Vision
- The pandemic exacerbated weak growth momentum and raised scarring risks via debt overhang and fiscal consolidation, persistent weakness in high contact-intensive sectors, loss of schooling, and loss of high-skill expatriates.
- A post-pandemic growth strategy should focus on promoting investments in strategic sectors and improving export competitiveness given high private consumption, limited fiscal space, and a small domestic market.
- The government launched an Economic Modernization Vision (early June 2022) with the following features and targets:
  - Developed through participation of more than 500 specialists, stakeholders and representatives.
  - Implementation in 3 phases over a period of 10 years to create employment opportunities and raise standards of living.
  - Ambitious targets include boosting real GDP growth rate to 5.6 percent per year and creating one million employment opportunities by 2033.
  - Strategic goals by end of 2033 include: creating one million economic opportunities by 2033; increasing the real income per capita by an average of 3 percent per year; improving several global index rankings to specified percentiles.
  - Eight main driver areas: (i) High Value Industries; (ii) Future Services; (iii) Destination Jordan; (iv) Smart Jordan; (v) Sustainable Resources; (vi) Invest Jordan; (vii) Green Jordan; (viii) Vibrant Jordan.
  - Estimated overall investment required: about JD 41 billion in the next 10 years.
  - About 72 percent of the investment is expected to be mobilized from the private sector and the remaining 28 percent will come from the government’s budget, with support from donors.

### Cross-cutting bottlenecks and policy recommendations
- Key constraints identified include innovation and macroeconomic environment in the Global Competitiveness Index; health and education performed well.
- Businesses cite tax administration and electricity costs as the two main business constraints; high energy cost is a major challenge for retail and wholesale trade, hospitality, industrial and agriculture sectors.
- Reforms already implemented include administrative efficiency improvements in tax administration and a new electricity tariff structure.
- Priority policy actions to catalyze strategic investments and export growth:
  - Reducing costs of doing business, particularly electricity costs and tax administration burdens:
    - New electricity tariffs rolled out on April 1, 2022 will reduce electricity tariffs by 13 percent on average for the corporate sector.
    - Reforms to streamline tax rules and incentives under the EFF aim to simplify and improve tax administration efficiency.
  - Mobilizing financing for digital infrastructure and climate adaptation:
    - Digital and ICT infrastructure and climate adaptation require large investments; participation of the private sector and external donors will be needed given limited fiscal space.
    - Strengthening governance and transparency will be important for attracting FDI and mobilizing private and donor financing.
    - The PPP law and the new legislation on investment climate will reduce policy unpredictability and investment risks.
  - Promoting labor market flexibility and participation:
    - Policies should facilitate labor reallocations from public sector and low-productivity services to more productive sectors.
    - Incentives include removing gender-biased articles from labor legislation and providing job training.
    - Need to attract entrepreneurs and skilled workers for priority sectors such as professional business services, tourism, and logistics.
  - Increasing firm dynamism by enhancing competition:
    - Remove policy distortions that lead to resource misallocation (industry subsidies, size-dependent policies, subsidies to state-owned enterprises).
    - Remove barriers to entry, strengthen competition and anti-corruption frameworks, streamline licensing, and reduce the economic footprint of the state.
    - A new competition law is being drafted as an important step toward enhancing competition.

*Source: IMF staff chapter text.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1jorea2022004.pdf_