The aim of this paper is to test the relevance and the stability of Okun’s law for the case of Morocco over the period 2000-2014 using quarterly data. One of the features of our approach is the adoption of dynamic modelling to assess the sensitivity of cyclical unemployment over the periodes of expansion and contraction of the output cycle, as well as its response to sectoral output fluctuations. Our results show the existence of a structural break in the Okun’s relationship for the Moroccan case, and a high rigidity in the unemployment’s dynamic. Also, the asymmetry test of the relationship showed that cyclical unemployment is only linked to contractions in cyclical output, and more particularly to those in the tertiary sector. The policy implications of these results are important for three principal reasons. First, the assumption that “higher growth leads to lower unemployment” is not valid, at least, in the short term. Second, the introduction of policies to make the labour market more flexible is necessary, and finally, the adoption of supply-side policies is required to ensure a structural transformation of the Moroccan economy.
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