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The Impact of the Employment Protection Legislation Reform on the Labor Market’s Flexicurity in Morocco

Author

Listed:
  • Saïd TOUFIK

    (Mohammed V University of Rabat, Faculty of Economics & Law, Laboratory of Economic Analysis and Modeling - LEAM, Morocco.)

  • Mohammed-Amine ARKHIS

    (Mohammed V University of Rabat, Faculty of Economics & Law, Laboratory of Economic Analysis and Modeling - LEAM, Morocco.)

  • Youssef OUKHALLOU

    (Mohammed V University of Rabat, Faculty of Economics & Law, Laboratory of Economic Analysis and Modeling - LEAM, Morocco.)

  • Saâd El Baghdadi El BAGDADI

    (Mohammed V University of Rabat, Faculty of Economics & Law, Laboratory of Economic Analysis and Modeling - LEAM, Morocco.)

Abstract

This paper uses the OECD’s methodology to build an Employment Protection Legislation index (EPL) for the Moroccan economy. In this framework, the main objective is to assess the impact of the new Labor Code’s provisions on the degree of flexicurity in the labor market. The paper also investigates the approximate influence of the EPL changes as regards to some employment-related variables. Our results show that after the 2004 Labor Code reform, the labor market’s flexibility level went down from 75 percent to 44 percent, as EPL became significantly stricter. Furthermore, our analysis suggests that the new legislation, although it brought relatively strict restrictions on hiring and firing, generated a significant increase in dismissals during the three first years of its implementation. And unlike the buckle of conventional literature and several empirical findings, the unemployment rate actually dropped, allegedly backed-up by a solid GDP growth during the 2000’s.

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Handle: RePEc:cvv:journ4:v:4:y:2017:i:1:p:14-26
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JEL classification:

  • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
  • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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