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The Iranian Revolution, while similar to other modern revolutions in many aspects, has resulted in several innovative social policies which have not been pursued as seriously by other revolutionary governments. In this paper we will study one political innovation that has significant consequences for economic development. Taking advantage of its near monopoly on higher education and complete control over public sector employment, the Iranian government has set up a complex system of political screening and filtering for admission to colleges and universities, as well public sector employment.This filtering process is complemented by a quota system which further enables the government to control the accessibility of higher education and public sector employment to various social groups. As would be expected, public reactions to these discriminatory policies are diverse. The beneficiary social groups offer justifications for this policy while those who are damaged by it express resentment in private circles.

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Mahmut Ak, shocked the attendants in the annual ceremony for the start of the 2015-16 academic year by announcing that student enrollments for current academic year have been reduced 1. This news came as a surprise to the entire academic community in Turkey. He further explained that this decision was motivated by the poor job market conditions for university graduates. The difficult labor market for university graduates is not an unnoticed issue in itself but the unemployment rate for university graduates has recently reached unprecedented levels that Turkey has never experienced before. Turkey is one of the few developed countries in which unemployment rate for workers with university degrees is higher than less educated workers. The 2015 employment statistics for Turkey confirms Professor Ak's concern. The July 2015 statistics that were released in October show that university graduates accounted for 24% of the unemployed workers in July 2015 while the same ratio in April 2014 was only 18% 2. Concern about this issue was also acknowledged by the founder and chairman of the board of Trustees of Gedik University, Hulya Gedik, in October 2015: "There are more than 200 universities in operation. … However, graduation doesn't guarantee getting a job. There are one million jobless university graduates [in Turkey]" 3. This bad employment news comes at a time when a record large cohort of Turkish university students are expected to enter the labor market in the next two years. At the same time the recent political turmoil and ethnic violence is taking a toll on Turkish economy and its capacity to generate new jobs. In this policy report we analyze the causes and consequences of the emerging employment crisis of university graduates in Turkey. Our analysis has three objectives: 1) to offer an overview of the latest developments in quantitative growth of enrollment in higher education institutions and employment status of university graduates in Turkey, 2) To analyze the policies and institutions that have led to this rapid rise of university graduates and, 3) to assess the possible responses of policy makers and households to this crisis. In light of the fact that a large amount of public and private resources are spent on higher education, the lack of sufficient economic opportunities for university graduates represents a waste of valuable resources that could have been invested elsewhere. The frustration of millions of educated unemployed youth is also a potential source of political and social instability. The significance of this analysis extents beyond Turkey and is relevant for other Middle Eastern economies as well. Similar to Turkey, many countries in the region,