## Morocco: Selected Issues

_IMF Staff Country Reports, July 16, 2019_

## Source details

**Canonical URL:** [Morocco: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/07/12/morocco-selected-issues-47115)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/07/12/morocco-selected-issues-47115/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/07/12/morocco-selected-issues-47115/index.json)
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## Bibliographic details
- Published: July 16, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498325905.002

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### Summary
- The paper studies the potential for well-sequenced labor and product market reforms to play a more important role in promoting growth and job creation in Morocco.
- A Dynamic General Equilibrium model is used to assess the macroeconomic effects of different reform scenarios (isolated, coordinated, or sequenced) that reduce hiring costs and/or firms’ entry costs in the presence of a large informal sector.
- Main quantitative headline: implementing simultaneous reforms in the labor and product markets could add about 2.5 percent of gross domestic product growth and reduce unemployment by about 2.2 percentage points after five years.

### Methodology and Scenarios
- Model: Dynamic General Equilibrium model calibrated to account for a large informal sector.
- Reform scenarios evaluated:
  - Isolated reforms (labor or product market alone).
  - Coordinated reforms (simultaneous labor and product market reforms).
  - Sequenced reforms (reforms introduced one after another, reflecting capacity or political economy constraints).
- Policy levers modeled: reductions in hiring costs and reductions in firms’ entry costs.

### Key Findings and Quantitative Results
- Coordinated implementation of labor and product market reforms:
  - Could add about 2.5 percent of gross domestic product growth after five years.
  - Could reduce unemployment by about 2.2 percentage points after five years.
- Sequenced implementation:
  - Starting with product market reforms is more effective in boosting output in the short-run.
  - Starting with labor market reforms would reduce unemployment faster.

### Policy Implications
- Reforms are most effective if executed in a coordinated fashion across labor and product markets.
- When simultaneous implementation is not feasible:
  - Prioritize product market reforms to maximize short-run output gains.
  - Prioritize labor market reforms to achieve faster reductions in unemployment.
- Consideration of capacity and political economy constraints is important when choosing sequencing.

*International Monetary Fund. Middle East and Central Asia Dept. "Morocco: Selected Issues", July 16, 2019.*

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## Content in this bundle

- **Morocco: Selected Issues; IMF Country Report No. 19/231; April 30, 2019**
  - [Morocco: Selected Issues; IMF Country Report No. 19/231; April 30, 2019 (Markdown version)](/-/media/files/publications/cr/2019/1marea2019004.pdf.md){rel="alternate" type="text/markdown"}
  - [Morocco: Selected Issues; IMF Country Report No. 19/231; April 30, 2019 (PDF)](/-/media/files/publications/cr/2019/1marea2019004.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/07/12/morocco-selected-issues-47115_