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Are Minimum Wages and Payroll Taxes a Constraint to the Creation of Formal Jobs in Morocco?

19 Pages Posted: 9 Sep 2016  

Diego F. Angel-Urdinola

World Bank

Abdoul Gadiry Barry

World Bank

Jamal Guennouni

High Commission for the Plan of Morocco - Department of Statistics

Date Written: August 31, 2016

Abstract

This paper uses a search-and-matching model to examine the effects of labor regulations that influence the cost of formal labor (notably minimum wages and payroll taxes) on labor market outcomes in Morocco. The model assumes that the informal sector is unregulated and thus not directly affected by these labor policies. However, the model takes into consideration that although labor policies apply only to the formal sector, they may influence the size and the composition of employment in the informal sector, as well as the size and composition of unemployment and self-employment. The results indicate that these regulations, especially minimum wage policy, contribute to higher unemployment rates and constraint formalization in Morocco, especially for youth and women.

Suggested Citation

Angel-Urdinola, Diego F. and Barry, Abdoul Gadiry and Guennouni, Jamal, Are Minimum Wages and Payroll Taxes a Constraint to the Creation of Formal Jobs in Morocco? (August 31, 2016). World Bank Policy Research Working Paper No. 7808. Available at SSRN: https://ssrn.com/abstract=2836559

Diego Angel-Urdinola (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Abdoul Gadiry Barry

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Jamal Guennouni

High Commission for the Plan of Morocco - Department of Statistics

Rabat
Morocco

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