We made a number of extensions and changes to adapt the approach in Schwartz et al. (2009) for LAC to MENA. First, wage levels were changed to reflect the fact that they are heterogeneous across and within MENA countries, and different from those in LAC. Following the idea of Schwartz et al. (2009), hourly wage costs for construction work were estimated for the three sub-regions of MENA as given in Table 7 .<sup>7</sup> Computing hourly wages is crucial for all the estimates and is subject to potential underestimation, specifically for the GCC and the developing oil exporting countries. To build our reference values, we take data from Gardiner and Theobald<sup>8</sup> (2007) for Lebanon, Qatar and UAE and data from Tong (2010) for the UAE.<sup>9</sup> Those data correspond to the actual cost of labor, as they encompass the various compensation schemes and not only the direct cash transfers. We need to provide homogenous wage estimates within sub-regions as the investment needs applied later are aggregated values. To do so, we compute regional wage averages, based on the ILO Key Indicators of the Labor Market in 2011 and assume constant difference between the ILO indicators and the total compensation in the selected countries. Our estimates have to be considered carefully as they do not reflect the intensive use of migrant workers in the infrastructure and construction sectors and the high variance of wages in developing oil exporters and GCC economies.

**Table 7 Estimated hourly wages (in 2010 US$) in infrastructure works**

|**_Region_**|**US$ per hour:**<br>**Qualified workers**|**US$ per hour:**<br>**Non-qualified workers**|
|---|---|---|
|**GCC oil exporters**|4.5|3.0|
|**Oil importing countries**|1.5|1.0|
|**Developing oilexporters**|3.0|2.0|

Source: Authors’ estimates <mark>Second, we adopted more conservative multipliers than the estimated multiplier of 4 proposed by Schwartz et al. (2009).</mark><sup>10</sup> <mark>In this adaptation we use the multipliers for 2007/08 in the Egyptian IO table. The type II multiplier (the ratio of all jobs created to the number of direct jobs) varies between 1.09 and 1.82. Those multipliers suggest that the transport and communication sectors, for instance, have far greater potential to create induced and indirect job effects than the roads and bridges construction sector. This indicates that when investment decisions are made with the objective of creating jobs, consideration should be given to both direct and indirect employment effects as well as the type of skills required to implement projects.</mark> Third, this adaptation also estimates and accounts for the share of each input factor for infrastructure projects relevant for MENA countries and based on standard technologies for each subsector that were not considered in the LAC estimates.<sup>11</sup> The shares, presented in Appendix Table 1, indicate that labor accounts for a much larger share of costs in water and sanitation than in roads, ports and electricity generation and access. The sanitation sector is most promising as

> 7 Schwartz et al. (2009) assume hourly wages gross of benefits to be respectively US$6 and US$3 for qualified and non-qualified workers in LAC.

> 8 The data in Gardiner and Theobald (2007) for Latin America are consistent with the ones used in Schwartz et al. (2009), allowing us to use a similar methodology.

> 9 Converting to US$ hourly wage, the median wage in construction is approximately US$3.7.

> 10 Such a multiplier implies one indirect job per one direct job, one induced job per one direct and one indirect job.

> 11 The percentages for railways are adapted from Heintz et al. (2009). The estimates for telecommunication are adapted from Foreman and Beauvais (1999).

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