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Labor Market and Growth in Morocco

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  • Lahcen ACHY

    (INSEA, Rabat, Morocco)

Abstract

The purpose of this paper is to investigate how the functioning of the labor market in Morocco is affecting economic growth. The first section examines the demographic factors affecting the supply side of the labor market such as the population growth, the pace of urbanization, and the increase of female labor force participation over the last decades. These three demographic factors, although dealt with jointly, don’t have the same effects on the labor market conditions and may be connected to economic growth through different channels. The second section explores the potential distorting effects of policy choices undertaken by policy makers in Morocco over the last four decades. For a long time, the government provided much more incentives to capital intensive investment at the extent of labor intensive technologies, which distorted the allocation of resources and crowded out the abundant labor force. As a consequence, formal sector has not crated enough job opportunities while survival activities in the informal sector have expanded very rapidly. The third section investigates the educational system as the main mechanism through which human capital is accumulated. As in Lucas-Uzawa framework, human capital is accumulated endogenously as a result of individual optimal investment decisions on the basis of the expected returns on the labor market. One of the key issues is the increasing rate of graduates unemployed. Does this mean that educational system is not adequately responding to the needs of the productive system? Or that the productive system is still underdeveloped to absorb all the available skilled labor supplied on the marketplace. The fourth section of the paper examines the contribution of the public sector to employment and the nature of qualifications required by public sector jobs. The public sector wage bill in Morocco is excessive and tends to put constantly pressure on the government budget, which threatens macroeconomic stability and restrains growth prospects. The fifth section presents briefly the labor market regulation in Morocco and the extent to which they are effectively enforced. It attempts to assess the extent to which the existence of minimum wage has protected the purchasing power of workers. It also deals with the impact of existing regulations imposed to the formal sector on the expansion of a large informal sector.

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File URL: http://128.118.178.162/eps/lab/papers/0512/0512007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0512007.

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Length: 17 pages
Date of creation: 14 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0512007

Note: Type of Document - pdf; pages: 17. Interaction between labor market and economic performance
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Web page: http://128.118.178.162

Related research

Keywords: Labor Market; Education; Public employment; Morocco;

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Citations

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Cited by:
  1. Fatma El-Hamidi, 2006. "Why Does the MENA Region Have Such High Unemployment Rates?," Working Papers 270, University of Pittsburgh, Department of Economics, revised Sep 2006.
  2. Jellal, Mohamed, 2012. "Dualisme Migration et Chômage au Maroc
    [Morocco dualism migration and unemployment policies]
    ," MPRA Paper 38365, University Library of Munich, Germany.
  3. F Z Alaoui Moustain, 2004. "Market distortions and the informal economy: the case of Morocco," Working Papers 542774, Lancaster University Management School, Economics Department.
  4. Christophe Muller, Christophe Nordman, 2008. "Task Organization, Human Capital and Wages in Moroccan Exporting Firms," THEMA Working Papers 2008-39, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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