Labor Market Policies and Unemployment in Morocco: A Quantitative Analysis

82 Pages Posted: 20 Apr 2016

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Karim El Aynaoui

World Bank

Date Written: July 2, 2003

Abstract

Agenor and El Aynaoui study the impact of labor market policies on unemployment in Morocco. They begin by reviewing the main features of the labor market. Then they present a quantitative framework that captures many of these features - such as a large public sector, high redundancy payments, powerful trade unions, and international labor migration. The authors simulate the impact of a cut in the minimum wage and a reduction in payroll taxation. The results indicate that these policies may have a significant impact in the short term on open unskilled unemployment. But they also show that labor market reforms, to be effective in the long run, may need to be accompanied by offsetting changes in the budget to avoid crowding-out effects on private investment.

This paper - a joint product of the Poverty Reduction and Economic Management Division, World Bank Institute and Poverty Reduction and Economic Management 2, Africa Technical Families - is part of a larger effort in the Bank to understand the impact of labor market reforms on growth and unemployment.

Suggested Citation

Agenor, Pierre-Richard and Aynaoui, Karim El, Labor Market Policies and Unemployment in Morocco: A Quantitative Analysis (July 2, 2003). World Bank Policy Research Working Paper No. 3091. Available at SSRN: https://ssrn.com/abstract=636453

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Karim El Aynaoui

World Bank

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

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