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American Economic Journal: Economic Policy


This paper studies the effects of quota-based labor regulations on firms in the context of Saudi Arabia's Nitaqat program, which imposed quotas for Saudi hiring at private firms. I use a comprehensive firm-level administrative dataset and exploit kinks in hiring incentives generated by the quotas to estimate the effects of this policy. I find that the program increased native employment at substantial cost to firms, as demonstrated by increasing exit rates and decreasing total employment at surviving firms. Firms without any Saudi employees at the onset of the program appear to bear most of these costs.


Copyright American Economic Association; reproduced with permission of the American Economic Journal: Economic Policy. Supplemental material for this article is available on the publisher's website.

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