Cost of unemployment. Concerning the natural rate of unemployment estimation, the Author has used
average size of families' data from the Ministry of Social Affairs as well as population family size censuses to
arrive at the rate of natural unemployment, especially for extended family support for those out of work. In
KSA, families tend to be larger and extended families also provide support, as a formal “signing up” system for
unemployment benefits was not operating as a government policy at the time of publication. As such, Saudi
national rate of unemployment tends to be higher compared with countries that have a formal system of
unemployment benefit registration. The book highlights the Saudi phenomenon of voluntary “educated
unemployed” dealt (pp.382–383), as being unique to resource rich countries such as Saudi Arabia, where
educated youth remain voluntarily unemployed upon returning back from international scholarships in the
hope of obtaining higher paid Government or resource based jobs, and preferring not to take up available, but
less “socially desired” jobs, thus leading to further “natural rate of unemployment” discussed earlier. This is
unlike countries such as Lebanon, Jordan etc.where youth try to obtain higher education to obtain better jobs
abroad, leading to a brain drain and a further cycle of more youth emulating their predecessor's success.
According to a classical view of the market, buyers and sellers find one another immediately, without cost,
and have perfect information about the prices of all goods and services. But this is not what happens in the real world, and that, as a consequence, stubborn unemployment will decline slowly. The policy implication is
that in societieswhere unemployment benefits are paid, the State can use reductions in such benefits to force
those unemployed back into available jobs. In Saudi Arabia, with no such schemes in place (at time of
writing), only moral suasion and the lack of extended family support will drive unemployed educated/non
educated youth back into the labor market to seek lower than hoped for available jobs. Concerning using
“Okun's Law” to derive potential GDP losses due to unemployment, it is agreed that Okun's initial studies
relate to the U.S. economy and is an empirical relationship. The Author's attempt is to try and estimate the
potential GDP losses for the Saudi economy using the same empirical relationship, as well as official
government unemployment data (for males only) as a starting base and extrapolate forward.