Applied Econometrics and International Development.

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UNEMPLOYMENT, STATUS IN EMPLOYMENT AND

WAGES IN MOROCCO
BOUDARBAT, Brahim*
Abstract
High unemployment rates among educated workers in Morocco and many other
developing countries is a serious issue. The worsening unemployment problem among
educated workers in Morocco started with the cuts to public sector hiring under
structural adjustment policies implemented in 1983. Thus, this paper analyzes the
evolution of the determinants of employment and the status in employment and wages
in this country after 1983 using a cohort approach. Estimates based on microdata from
the 1998 Moroccan labour force survey confirm the deterioration in employment of
educated workers after 1983. The results also show that the contraction of employment
opportunities has increased the probability of considering self-employment as an
alternative to unemployment, except for university graduates who still prefer paid work
and, consequently, risk long periods of unemployment. Results also exhibit a
significant decline over time in returns to education, whereas paid employment
opportunities and wages have improved for uneducated workers.
JEL classification: J24, J31, J38, J42, J45, J60

Key words: Morocco, public sector, adjustment policies, unemployment,

education.
1.Introduction
During the last two decades, Morocco has experienced a significantly worsening
unemployment problem in urban areas, particularly among educated workers. The
urban unemployment rate increased by 8 points between 1982 and 1994, rising from
12.3% to 20.3%. In rural areas, the unemployment rate increased from 9.5% to 10.8%
during the same period, but sharply diminished thereafter to reach 3.9% in 2002 versus
18.3% in urban areas. This deterioration of urban employment mainly involves
educated workers. In 2002, the overall unemployment rate was 34% among workers
with secondary diplomas and 32.2% among university graduates as opposed to only
5.6% among uneducated workers. This phenomenon is not unique to Morocco but is
commonly observed in many other developing countries. Upadhyay (1994) refers to
many examples in countries from Asia, Africa and Latin America, where
unemployment is widespread among educated workers. This situation is often related
*

Brahim Boudarbat, Assistant professor, School of Industrial Relations, Universit de

Montral, Canada, and IZA (Germany), Email: brahim.boudarbat@umontreal.ca
Acknowledgement: I would like to thank Thomas Lemieux, Claude Montmarquette and Andr
Martens for helpful comments and suggestions. I also would like to thank David Green,
Dwayne Benjamin and seminar participants at the University of Montreal, the University of
British Columbia, the University of Ottawa, and the Canadian Economics Association 2002
Conference in Calgary for useful comments on an earlier version of this paper. Many thanks
also go to the Moroccan Department of Statistics for providing data used in this paper.
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to the share and the evolution of the organized sectors in employment, but also and
more often to the behaviour of workers with regard to job search strategies and
investment in education.
In Morocco, educated workers typically work in the public sector.1 However,
recruitment in the public sector declined abruptly after 1983 under structural
adjustment policies dictated by the International Monetary Funds (IMF). New
employment positions created since 1983 do not exceed 15,000 annually (13,000 in
2004) as opposed to between 30,000 and 50,000 between 1976 and 1982. This
reduction of employment in the public sector seems to be the starting point of the
deterioration in the employment of educated workers. Indeed, the representativeness of
workers with a university education in the unemployed population (given by their share
in the unemployed population minus their share in the labour force) increased from
3% in 1984 to +7.7% in 2002. Despite the sharp reduction of employment in the
Moroccan public sector, educated workers still show a strong desire for employment in
the public sector, since over four out of ten of the university unemployed seek
employment exclusively in this sector. The public sector pays higher wages and offers
better employment conditions compared to the private (mostly informal) sector, which
influences the workers behaviour; workers likely prefer employment with the former
and do little to pursue alternative options.
One of the aims of the structural adjustment policies was to assign to the private
sector a more important role in the economy, especially in employment. Hence,
employment policies after the 1983 adjustment programs aimed at boosting labour
demand in the private sector and at encouraging educated workers to seek employment
in this sector.2 However, noticing that unemployment kept worsening among educated
workers, in a second phase the government aimed at driving educated workers toward
self-employment by implementing different programs which primarily benefit
university and vocational training graduates. Henceforth, the government considers
self-employment as the appropriate alternative to unemployment for educated workers.
In addition, the government hopes that small projects initiated by educated workers
will contribute to creating paid work and then to reducing the overall unemployment
rate.
Several studies have addressed the situation in the Moroccan labour market (Agnor
and El Aynaoui, 2003; Boudarbat, 2004; Bougroum, Ibourk and Trachen, 1999;
Combarnous, 1999; Lane, Hakim and Miranda, 1999, for instance). However, to our
knowledge, there is no study that examines the effects of changing labour market
conditions on labour market outcomes, especially with regard self-employment and
wages. This paper tries to fill this gap. For this purpose, we use a cohort approach to
1

In 1998, the share of this sector in the employment of university graduates in urban areas was
65%.
2
For instance, in 1983 the government promulgated the industrial investments code which
provides incentives to the creation of jobs, such as grants of a premium to industrial SME for
each stable job created during their first four years of establishment.
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show the impact of the structural adjustment policies on the Moroccan labour market.
The cohort approach is used with cross-section data from the 1998 Moroccan labour
force survey. However, we adjust for selection biases to obtain correct conclusions
with these data.
The remainder of the paper is organized as follows. Section 2 reviews the main
features of the Moroccan labour market and provides some explanations for the
worsening unemployment problem among educated workers. In Section 3, we present
an empirical model jointly estimating (1) the employment equation, (2) the status in
employment equation, and (3) the wage equation. Section 4 presents data and empirical
results. Data is for a representative sample of 42,663 urban workers drawn from the
1998 Moroccan labour force survey. As anticipated, our results suggest that when
controlling for observed characteristics, the decision to consider self-employment is
negatively correlated with the probability of finding employment. The results also
indicate that the probability of being self-employed has increased since 1983 for all
education groups except for university workers. Finally, the results show a decrease in
returns to education, especially to secondary diplomas and university degrees, whereas
wages and employment opportunities significantly improved for uneducated and
poorly educated workers. The latter result can be explained mainly by the continuous
decrease in the share of uneducated workers in the labour force as a result of the
improvement in the schooling rate among young people contrasted with little change in
the structure of the economy still favourable to uneducated workers. The latter have, in
addition, profited from the successive and substantial rises in the minimum wage
during the 1980s and 1990s. Section 5 concludes the study.
2.Overview of the Moroccan Labour Market
In 2002, the size of the Moroccan labour force was 10.7 million, representing 50.7%
of the population sector aged 15 and older. The labour force participation rate is much
higher in rural areas (58.5%) than in urban areas (45.4%), and for men (77.3%) than
for women (24.9%). A main feature of the Moroccan labour force is the preponderance
of uneducated workers. About seven out of every ten workers (67.6%) never attended
school or did not complete the first six years of elementary education. This
characteristic describes 88.8% of rural workers versus 48.4% of urban workers and
70.9% of female workers versus 66.5% of male workers. The share of workers with
secondary diplomas and university degrees is 10.3% and is higher among women
(13.6% versus 9.2% for men). The low level of schooling of the labour force is
consistent with the high rate of illiteracy, which is 49% in the population sector aged
15 and older.
Over time, Morocco has experienced a significantly worsening unemployment
problem. The unemployment rate almost doubled between 1971 and 1994, rising from
8.8% to 16% before falling to 11.6% in 2002. The number of job-seekers reached 1332
thousand in 1994 compared to 216 thousand in 1971 (see Table 1). This deterioration
in employment particularly affected urban areas, where the unemployment rate (18.3%
in 2002) has been above 20% for several years. Conversely, the unemployment rate in
rural areas was the lowest in 2002 and the number of job-seekers in 2002 was only 53
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thousand greater than the corresponding number in 1971. As a matter of fact, the
pressure on the labour market was much higher in urban areas since the size of the
urban population increased from 3.4 million in 1960 to more than 16 million in 2001
for a total growth of 381%, versus only 56% in rural areas during the same period. In
addition, since 1994, the size of the urban population has been higher than the size of
the rural population. Yet, the two areas differ with regard to the structure of
employment. Rural areas are dominated by non-remunerated employment,3 which
accounts for 52.6% of total employment (84.1% of employed women) in these areas
versus only 5.5% in urban areas (5.1% of employed women). By gender, the
unemployment rate among women declined spectacularly over time, falling from
23.1% in 1994 to 12.5% in 2002, versus 16% to 11.6% for men. However, the
performance of women remains poor in the urban labour market in view of the fact that
their unemployment rate in 2002 was 24.2% as opposed to 16.6% for men.
The worsening unemployment problem also involves educated workers. In 2002, the
unemployment rate among uneducated workers and those who did not complete the
first six years of elementary education was only 5.6% versus 34% among workers with
secondary diplomas and 32.2% among university graduates. Basically, workers with all
levels of education face high risks of unemployment, as shown in Table 2. The
employment situation of educated workers started to worsen in the early 1980s. For
comparison purposes, Figures 1 and 2 depict the evolution of the shares of workers
with university education and uneducated workers in the urban labour force and the
urban unemployed population between 1978 and 2002. The share of university workers
in the labour force continuously increased over time, rising from 2.9% in 1978 to
12.7% in 2002, whereas their share in the unemployed population increased more
rapidly during the same period, from 0.4% to 20.4%. The gap between the two shares
widened over time, a fact that resulted in university workers being increasingly overrepresented in the unemployed population since 1987. On the other hand, uneducated
workers enjoy better employment opportunities, given that their share in the
unemployed population is consistently 13 to 19 points lower than their share in the
labour force (Figure 2). Workers also experience long spells of unemployment. In
2002, the average duration of unemployment was 37.6 months for all unemployed
workers pooled and 45.2 months for unemployed workers holding secondary diplomas
or university degrees. In addition, 52% of unemployed workers were still seeking their
first jobs. This proportion was 80.9% among unemployed workers holding secondary
diplomas or university degrees.
Many arguments are given to explain the situation in the Moroccan labour market
and other developing labour markets. The rapid growth of the population, particularly
the educated population, is naturally one of the factors to blame. The population of
Morocco has tripled over the last 50 years due particularly to a high birth rate and a
low mortality rate. The mortality rate among children under 5 decreased from 22% in
1960 to 4.3% in 2002 as a result of the improvement in food quality and sanitary
conditions. The increase in the population size was paralleled by a substantial
3

Unpaid family workers

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improvement in the schooling of young people. For instance, primary school enrolment
increased from 47% in 1975 to 88% in 2000. Thus, the share of uneducated workers in
the labour force significantly decreased over time, as depicted in Figure 2. Naturally,
increased schooling raises the preference for protected employment in the formal
sector (Orivel, 1995; Gaude, 1997; Combarnous, 1999).4 This aspiration contrasts with
the little change in the structure of the Moroccan economy, which is still favourable to
uneducated workers. For instance, the share of the agricultural sector in the GDP has
consistently ranged between 15% and 20% since 1970, and this sector is still the
largest employer with 44.4% of total employment in 2002.
In the literature, developing labour markets are often described as consisting of two
sectors: a formal/primary sector paying high wages but with limited employment
opportunities and informal/secondary sector offering unlimited employment
opportunities but paying low wages (see, for example, Harris and Todaro, 1970;
Stiglitz, 1974 and 1976; Eaton & Neher, 1975). Harris and Todaro (1970) explain the
high urban unemployment rate in developing countries by the substantial wage
differential between urban and rural areas, which encourages some rural workers to
migrate to urban areas. The unemployed are blamed because they voluntarily choose
unemployment in order to improve their economic position rather than take available
low paid jobs in the secondary sector (Eaton & Neher, 1975). However, in the current
context this explanation seems more appropriate for uneducated workers than for
educated ones, given the great employment opportunities in the informal sector
(including agriculture) in developing countries. In the specific case of university
graduates, and given the strong preference for employment in the public sector
exhibited by these workers, Boudarbat (2004) rather considers a dual labour market
where the public sector and the private sector are the two employers. Given the
substantial wage gap between the two sectors, he shows that educated workers find it
optimal to prolong their unemployment episodes in order to find jobs in the public
sector. This argument regarding job-search strategies is also supported by Bougroum,
Ibourk and Trachens study (1999) which, in addition, points the finger at the
inefficiency of investment in university programs, since many students attend
university simply because they have no other options. In the same vein, Rama (1998)
argues that the line between being unemployed and working in the informal sector is
very thin for educated workers. Workers seeking employment in the formal sector may
decline employment opportunities in the informal sector or may report themselves as
unemployed if they do not. Lane, Hakim and Miranda (1999) blame the fast growth of
the urban labour force contrasted with an inadequate labour demand, and the structural
shift in the employment composition of manufacturing to low-paying industries linked
to the export sector, which ultimately favoured uneducated and poorly educated
workers. Indeed, increased foreign trade (especially with the European Union) has
stimulated the production in sectors for which Morocco has a comparative advantage
and which are intensive in unskilled (and cheap) labour (mainly agriculture and
garment industries). The trade reform in Morocco, which reduced the barriers to
4

Orivel (1995) even argues that some rural parents prevent their children from receiving an
education in order to keep them in or close to their families.
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imports, was initiated precisely in 1983, the same year the adjustment policies were
implemented (see Currie and Harrison, 1997, for an overview of this trade reform).
Upadhyay (1994) evokes government subsidies to education in developing countries
as an explanation for the high unemployment rate among educated workers in these
countries. Upadhyay argues that such subsidies have increased the demand for higher
education at the expense of investment in physical capital, which results in too much
education being produced relative to the needs of the labour market. Hence, one may
observe a situation where employment opportunities are very good for unskilled
workers but very limited for skilled ones. In Morocco, education in public universities
is free and students are allowed to repeat grades they fail (sometimes indefinitely). The
government also provides scholarships to most students, which attracts students to
university education even when there is no connection with the needs of the labour
market.
The sharp reduction of recruitment in the public sector under structural adjustment
policies implemented in 1983 is quoted as a key factor in the worsening unemployment
problem among university graduates. Indeed, the worsening employment situation of
educated workers parallels the slowdown of recruitment in the public sector, the
principal employer for educated workers in developing countries. Because of the
adjustment and austerity policies adopted by Morocco since August 1983 under the
aegis of the IMF, there was first a cancellation of more than 19,000 new positions in
the public sector forecast in the budget of 1983, then a cap on recruitment for
subsequent years. In the 2004 budget, the government envisaged creating 13,000 new
positions5 (less than 11,000 in 2002) versus more than 50,000 in 1976 and more than
45,000 in 1982. As depicted in Figure 1, the share of workers with a university
education in the unemployed population started its rise immediately after the
implementation of the adjustment policies. Despite the reduction of employment in the
public sector, Table 3 shows that this sector remains the preferred one for seeking
employment for a great proportion of unemployed university graduates. Indeed, 42.3%
of university graduates in urban areas seek employment only in the public sector,
versus 1.2% of workers with no degree/certificate. This proportion is also high among
unemployed workers with secondary diplomas.
3.Model of Employment Status and Wages
This study aims at analyzing the determinants of employment, the status in
employment (i.e. paid worker versus self-employed) and wages in the Moroccan labour
market. The study also examines how these determinants changed after 1983, the date
of the implementation of the structural adjustment policies in Morocco. We predict that
the scarcity of paid employment will drive more workers toward self-employment as
alternative to unemployment. The government has implemented many programs to
encourage and facilitate this shift. These programs were specifically developed after
1983 to put a stop to the worsening unemployment problem. In addition, the worsening
5

The transformation of existing positions from occasional into tenured accounts for 6000 of
them.
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employment conditions of educated workers are intuitively expected to have negative

effects on the wages paid to these workers (Beaudry and DiNardo, 1991).
To achieve the goals of the study, we use a cohort approach with cross-section data
from the Moroccan labour force. A crucial issue in the study is accounting for selection
biases that might distort our results. As indicated above, employment and status in
employment may be correlated since the self-employment choice can depend upon
available paid employment opportunities. Also, the analysis of the determinants of the
status in employment must account for the fact that this status is censored for
unemployed workers. Additionally, given the fact that wages are observed only for
paid workers, there are two possible sources of selection bias in estimates of the wage
equation: being employed and being a paid worker. The model we propose below
makes it possible to correct for those different selection biases. It is composed of three
freely correlated equations, one for each for the three studied subjects. For convenience
we omit the subscript i related to the individual.
Employment criterion:

e* = X 1 1 + e1

(1)

An individual is employed ( e = 1 ) if e* 0 , and is not employed ( e = 0 ) if e* < 0 .

Employment status criterion:

a* = X 2 2 + e2

(2)

An individual is a paid worker (a = 1 ) if a* 0 , and is self-employed (a = 0 ) if

a* < 0 .
Wage equation:

y = X 3 3 + e3

(3)

Equations (1) and (2) are reduced-form selection equations. e* and a* are latent
variables, y is the log of the monthly wage, X 1 , X 2 and X 3 denote vectors of
independent variables, 1 , 2 and 3 are vectors of parameters to be estimated, and

e1 , e2 and e3 denote unobserved error components. The censure occurs at two levels.
First, the status in employment is observed only if the worker is employed (i.e. a is
observed iff e = 1 ). Second, wages are observed only for paid workers (i.e. y is
observed iff e=1 and a=1).6 Thus, we have a censored model with two criteria for
selectivity (see Maddala, 1983, pp. 278283, for further examples and explanations on
multiple criteria for selectivity). The model is given by Equations (1), (2) and (3).

Unfortunately, the Moroccan labour force survey does not collect earnings of the selfemployed. This data limitation makes it impossible to account for these earnings in the workers
decisions with regard to status in employment.
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The random terms e1 , e2 and e3 are freely correlated, with the vector ( e1 ,e2 ,e3 )'
following a trivariate normal distribution with mean zero and variance-covariance
matrix:
1 12

=
1

13

23
33

.
We follow Ham (1982) 7 in estimating the model in two steps. The two-step
estimation is computationally more attractive than the maximum likelihood method
and produces consistent parameter estimates. The first stage of the approach involves
the estimation of a censored bivariate probit defined by Equations (1) and (2). The
corresponding log-likelihood function is:
l=

ln [ ( X )] + e=1 ln F ( X 11 , X 2 2 , 12 )
1

e=0

a= 0

ln F ( X 11 , X 2 2 , 12 )

e =1
a= 1

where ( .) is the distribution function of the univariate standard normal, and F is the
distribution function of the bivariate standard normal.
In the second stage, we estimate the selection-corrected wage equation by including in
the set of covariates two correction terms derived from the first stage. As shown by
Ham (1982), the expectation of the monthly log of the wage ( y ), conditional on being
employed and being a paid worker, is:
E(y | e* 0, a* 0) = X3 3
where:

13 1

23

( )
) ( X ) / F ( X , X ,

(4)

1 = ( X 11 ) X 1* / F ( X 11 , X 2 2 , 12 )
2 = ( X 2 2

*
2

1 1

2 2

12

2
X *1 = ( X 2 2 X 11 ) / 1 12
2
X *2 = ( X1 1 X 2 2 ) / 1 12

and ( .) and ( .) are the density and distribution functions of the univariate standard
normal, respectively, and F is the distribution function of the bivariate standard
normal. Notice that if the correlation coefficient 12 is equal to zero, 1 and 2 are
simply inverse Mill's Ratios.
7

The method is an extension of the two-stage estimator for one selection rule proposed by
Heckman (1979).
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Parameter estimates from the first stage are used to form consistent estimates, 1 and
2 , of 1 and 2 . Then, consistent estimates of

3 , 13 , and 23 are obtained by least

squares estimation of:

y = X3 3 - 13 1 - 23 2 + e3
where

(5)

e3 = 3 + 13 ( 1 - 1 ) + 23 ( 2 -2 )

Finally, consistent estimates of s 33 and the standard errors of the least squares slopes
are obtained using formulas from Ham (1982).
In this paper we adopt the same cohort approach used by Angrist and Lavy (1997) to
analyse the evolution of labour-market conditions after the implementation of the
structural adjustment policies in 1983. Indeed, we include in the sets of covariates a
dummy variable that takes the value 1 if a worker entered the labour force in 1983 or
later, and cross this variable with education levels. Our data source provides
information on labour force entry.
4.Data and Empirical results
We use data from the Moroccan Labour Force Survey (LFS) conducted in urban
areas in 1998. The LFS is an annual cross-section survey aiming at collecting key
information on labour force participation, employment and unemployment. Rural areas
were included in the survey only starting in 1999. Prior to 1999, data on rural areas
came from the census that was conducted once every 10 years. Information on
educational achievement is given by two variables. The first, called level of education,
indicates the highest level of education attended and specifies whether a worker
received a vocational training. Levels are: (i) none (uneducated), (ii) first stage of
elementary education (grades 16), (iii) second stage elementary education (grades 7
9), (iv) secondary (grades 1012) and (v) university. A worker is classified into a stage
of education if she attended any year of this stage regardless of completion or not of
this stage. The second variable is the highest degree/certificate obtained. There are
eight aggregated groups: (i) none (includes uneducated workers as well as those who
did not complete the first stage of elementary education), (ii) elementary (stage 1 or
stage 2 completed), (iii) level 1 (lower) of vocational training, (iv) level 2 (medium) of
vocational training, (v) secondary, (vi) technician (technical post-secondary training or
third and forth (higher) levels of vocational training), (vii) university, and (viii) higher
institutes.8
The 1998 LFS surveyed more than 130,000 individuals living in urban areas. The
size of the available sample of workers in the labour force is 42,663. Like in other
developing labour markets, some workers enter the labour force very young and others
continue to work at very old age. In the data file supplied by the Moroccan Department
of Statistics, there are workers as young as 7 and workers as old as 98. In total, 629
8

Higher institutes are of the same level as universities. They provide technical and professional
education (engineering schools for instance).
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workers are aged under 15 and 767 above 65. We removed these people from our
sample and focus our study on adults aged 15 to 65 at the time of the survey. We
also trim all wage observations with monthly wages below MAD9 500. The final
sample consists of 41,282 workers: 7946 are unemployed, 13,985 are employed unpaid
workers (mainly self-employed) and 19,351 are paid workers. Descriptive statistics are
presented in Table 4.
Women represent 24% of the sample, a proportion that agrees with the overall low
participation of women in the labour force. With regard to schooling, uneducated and
poorly educated workers (less than 6 years of elementary education) represent more
than 50% of our sample. The unemployment rate is 19%, which is exactly the same as
the official rate produced by the Moroccan department of statistics for the year 1998.
Despite the sharp slowdown in recruitment in the public sector since 1983, this sector
remains a key employer in the Moroccan labour market with a share of 22% of total
employment and 37% of paid employment in urban areas. The share of paid workers in
the employed population is relatively low (only 58%). The average number of weekly
hours is 48 for paid workers versus 54 for unpaid workers. The average monthly wage
is MAD 2,383, that is to say 44% higher than the minimum monthly wage (MAD
1,651) evaluated on the basis of average weekly hours (47.74) and the minimum hourly
wage in force in 1998 (MAD 7.98). However, only 5% of employees are paid more
than MAD 5,000. All parameter estimates are reported in Tables 5a and 5b for the
censored bivariate probit given by Equations (1) and (2), and in Tables 6a and 6b for
the selection-adjusted wages equation. In all equations, we control for the region of
residence (there are 16 regions in Morocco represented by 15 dummy variables in the
sets of covariates). In addition, we control for the month of observation in the
employment equation (11 dummy variables). Concerning education, we provide results
for the two available variables: the level of education and the highest degree/certificate
obtained. As can be seen, results are very comparable between the two specifications.
An important fact that emerges from all tables is that the covariances between
unobserved random terms in the three equations of the model are statistically
significant at the 1% level, a fact that supports our approach to correcting for selection
biases.
Employment and Status in Employmen.- Parameter estimates in Table 5a show that
being female has no effect on the probability of finding employment. Given the fact
that the unemployment rate is much higher among women than among men in urban
areas, this result suggests that observed differences between the genders are due to
differences in their characteristics rather than to discrimination against women. For
instance, women in the urban labour force are, on average, more educated than men
(46% of women are uneducated or poorly educated versus 53% of men, and 7% of
women hold university degrees versus only 3.6% of men), whereas education increases
the unemployment risk as shown below. However, when employed, women are more
likely to be paid workers compared to men, a status that is probably associated with
their degree of risk aversion, but also with their willingness to reconcile family and
9

MAD = Moroccan dirham. MAD 9 are worth about $1 US.

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work. On the other hand, being born in rural areas increases the likelihood of
employment but has no effect on the likelihood of being a paid worker. An explanation
for the effect on employment may be a sele ction process since some workers born in
rural areas migrate to urban areas when they find jobs there or in anticipation of better
employment opportunities. Yet, it is possible that some workers born in rural areas
migrated to urban areas before entering the labour force. It is also known that rural
workers are less demanding in terms of wages, conditions or duration of work when
seeking jobs. Being single lowers the probability of employment but increases the
probability of being a paid worker. Naturally, single workers are still young (26 years
on average versus 41 years for non-singles), so many of them are still looking for their
first jobs. Experience in paid work is also desired (even required) before considering
self-employment. Thus, increased age simultaneously increases the probability of
employment and the probability of self-employment. Also, in the Moroccan context,
single workers (and young people in general) are usually supported by their families,
so they may consider long durations of unemployment in order to find good jobs.
Indeed, only 6% of single workers in our sample are heads of households. In addition,
in the Moroccan context marital status is somewhat an endogenous variable, especially
for men, since it may be inconceivable to consider marriage before finding a job to
support the family.
Another interesting issue that emerges from Table 5a is that the probability of
employment is not affected by the adjustment policies of 1983. These policies may
have affected employment among graduates but not the overall employment level.
However, the preference for paid work significantly increased after 1983 in spite of
many programs introduced by the government to encourage self-employment. With
regard to education, we notice that increased schooling generally lowers the probability
of employment and, at the same time, increases the likelihood of being a paid worker
(education levels and degrees/certificates are sorted from the lowest to the highest
level). The risk of unemployment is highest among workers with university degrees.
The only exception is workers holding degrees from higher institutes who continue to
enjoy the best employment opportunities of all workers (including uneducated ones).
However, these workers represent only 2% of the labour force. Another significant
issue that emerges from the results in Table 5a is that receiving a vocational training
reduces the probability of employment, except when this training is preceded by
university studies. Thus, at any level of elementary and secondary education,
vocational training has a significant negative effect on employment. This contrasts with
the policy of the government, which considers vocational training the best medium to
meet labour market needs and to improve employment among young workers. It is also
unpredicted that vocational training graduates prefer paid work, since the probability of
being a paid worker increases with this training at all stages of education. The results
for the effects of education on employment status agree with those from previous
studies, which show that more schooling increases the preference for protected (paid)
employment (e.g., Orivel, 1995; Gaude, 1997; Combarnous, 1999). Those results can
also explain the increased preference for paid work after 1983, which in fact might
simply be connected with the increased schooling of the labour force.
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In order to examine the possible change in employment conditions of educated

workers after 1983, Table 5b depicts bivariate probit estimates when crossing Year
1983 with degrees/certificates. The results clearly show that employment has
worsened for all groups of educated workers, particularly for university graduates and
workers with higher vocational training. Conversely, employment of uneducated and
poorly educated workers has improved since the estimated coefficient of the variable
Year 1983 is now positive and significant. The non-significance of the same
coefficient in Table 5a is due to the contrasting evolution in the employment of
educated and uneducated workers. In spite of this of this result, we cannot assert that
the worsening unemployment problem of educated workers is directly linked to the
slowdown of recruitment in the public sector. Indeed, the variable Year 1983 might
simply reflect a trend in the Moroccan labour market that would have occurred even if
the adjustment policies were not implemented. Nonetheless, if we assume that
recruitment in the public sector remained at the same level as prior to 1983, this sector
would have created on average about 20,000 new additional positions per year, that is
to say 400,000 positions between 1983 and 2002. 10 Holding all else constant, the
unemployment rate in 2002 would fall to less than 8% versus 11.6% currently. Also, if
positions in the public sector were created only in urban areas, the unemployment rate
in these areas would fall to about 11% versus 18.3% currently. Evidently, these
predictions are partial since employment in the private sector as well as workers
behaviour is most likely to react to any change in employment the public sector.
With regard to paid work, the results in Table 5b suggest that the probability of being
a paid worker has significantly decreased for all groups of educated workers except for
university graduates and workers with lower level vocational training. The result
concerning university graduates might relate either to these workers inflexible
behaviour or to the nature of university programs which make it difficult for graduates
to set up viable businesses. The decrease in the probability of being a paid worker
mainly affected workers with medium and upper levels of vocational training, a fact
that may be a consequence of the government policy that considers vocational training
graduates the best candidates for self-employment. In addition to granting loans at
preferential interest rates to young educated entrepreneurs, the government instituted
substantial tax exemptions to benefit young entrepreneurs holding vocational training
diplomas.11 However, this policy excludes workers with lower level vocational
training. In addition, an investigation by the Moroccan Vocational Training
Department (Dpartement de la Formation Professionnelle, 1996) indicates that most
young entrepreneurs consider this policy to have been determinant in their decision to
create their own businesses.

10

The public sector created on average more than 35,000 new positions a year between 1975
and 1982 versus less than 15,000 annually thereafter.
11
The government also listed 20 trades that could be practised only by graduates holding
vocational training diplomas or by experienced workers who succeed at professional aptitude
tests. However, this regulation, which aimed at protecting graduates from competition from
uneducated workers or those trained on-the-job, has never been implemented.
176

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Unemployment, status in employment and wages in Morocco

Wage Equatio.- Tables 6a and 6b depict the selection-adjusted wage equation

estimates. The variable age is used as a proxy for work experience. Age squared allows
the non-linearity of earnings toward the end of the work life to be accounted for.
Estimates of the coefficients of the correction terms are jointly significant at the level
1%, a fact that provides evidence for the existence of selection biases. The male -female
wage gap is estimated at 13.4% when using levels of education and 17.3% when using
degrees/certificates. The public sector pays notably higher wages than the private
sectorthis wage differential is estimated at 23%.12 Boudarbat (2004) evaluates this
differential at 42.5% for university graduates when accounting for job search
behaviour. Also, Agnor and El Aynaoui (2003) estimate the gap at between 150% and
200% when taking into account non-wage compensation such as working conditions
and pension plans. Interestingly, the elastic ity of the monthly wage with respect to
weekly worked hours is not significant. This is not surprising, given the characteristics
of the Moroccan labour market. Indeed, negotiations, if there are any, between workers
and employers often concern monthly wages instead of hourly wages. It is also not
surprising that workers compare jobs based on monthly wages regardless of the
number of hours of work and working conditions. In addition, notions of part time
work and hourly wage are not common in Moroccan jargon except for some very
specific occupations.
Naturally, increased schooling increases earnings. It is interesting to see how
vocational training pays at all stages of education except when it is associated with
university education, a result that contrasts with the one from employment equation
estimates. Thus, vocational training graduates experience high unemployment risk, but
are awarded high wages once employed. By degree/certificate, the return to higher
education ranges between 122% for university graduates and 127% for higher-institute
graduates. In order to capture the possible effect of the unemployment driving down
wages, Table 6b shows estimates when controlling for the period after 1983. The main
remark concerns the significant decline in the returns to education after 1983, a result
that is probably explained by the decreased share of the public (high-wage) sector in
the employment of educated workers. Conversely, wages generally increased for
uneducated and poorly educated workers. Once again, university graduates were
among the most affected by the downward trend of wages paid to educated workers.
Angrist and Lavy (1997) obtain the same result regarding the reduced return to
education for young workers, which they explain by the switch of the language of
instruction from French to Arabic in the public elementary and secondary schools since
the early 1980s. On the other hand, uneducated workers have profited from the
consecutive substantial increases in the minimum wage.13 The minimum hourly wage
in manufacturing, trade and the liberal professions increased from MAD 1.4 in 1977 to
MAD 7.98 in 1996, for an average increase of 9.6% per year. In conclusion, educated
workers are undergoing the negative effects of combined factors, a situation which
raises the question about the rationality of investment in education in Morocco.
12

By way of comparison with a developed labour market, Gunderson, Hyatt and Riddell (2000)
show that government wages on average are estimated to be between 7% and 10% higher than
in the private sector in Canada.
13
Seven increases during the 1980s and five during 1990s.
177

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AEID.Vol. 6-1 (2006)

5.Conclusion
High unemployment among educated workers in developing countries is an
important and fascinating problem. The analysis of the Moroccan case can create a
better understanding of the functioning of developing labour markets in general. In this
country, the deterioration of the situation of educated workers parallels the slowdown
of employment in the public sector since 1983 under structural adjustment policies.
Yet, it is not clear to what degree theses policies contributed to that deterioration. The
present investigation uses microdata from the 1998 Moroccan labour force survey to
analyze the determinants of employment, paid employment and wages and their
evolution after 1983. Estimates support the contraction of employment opportunities
for educated workers, particularly for university graduates. The latter are the main
candidates for employment in the public sector. This contraction has encouraged more
educated workers to consider self-employment as an alternative to unemployment.
Results also suggest that returns to education decreased over time, especially with
respect to secondary diplomas and university degrees. An attention-grabbing result is
that paid employment opportunities and wages significantly improved for uneducated
and poorly educated workers. Natural explanations for this fact include the continuous
decrease in the share of uneducated workers in the labour force and the successive and
substantial rises in the minimum wage during the 1980s and 1990s. This result may
also reflect an increased degree of informalization of the Moroccan labour market.
Finally, the model could be improved if earnings were also collected from selfemployed workers. Intuitively, the decision regarding the status in employment is
expected to also depend upon the earnings gap between paid and self employment.
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Morocco: A Quantitative Analysis, Policy Research Working Paper Series # 3091, The
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Scientifiques du Rseau Analyse Economique et Dveloppement. Ouagadougou, 14 et
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secteurs dactivit des laurats de la formation professionnelle ayant cr leur propre
entreprise, Document administratif, 1996.
Direction de la Statistique, Royaume du Maroc (2003), Activit, emploi et chmage 2002,
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Direction de la Statistique, Royaume du Maroc (2000), ducation, Formation et
Opportunits dEmploi, 2000.
Direction de la Statistique, Royaume du Maroc (1999), Activit, emploi et chmage 1998,
Rapport de synthse, 1999.
Eaton, B.C.; P.A. Neher (1975), Unemployment, Underemployment, and Optimal Job
Search, The Journal of Political Economy, Volume 83, Issue 2 (Apr., 1975), 355-375.
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de lEmploi et de la Formation 1, Dpartement de lEmploi et de la Formation. Bureau
International du Travail. Genve.
Gunderson, M.; D. Hyatt; C. Riddell (2000), Pay Differences between the Government
and Private Sectors: Labour Force Survey and Census Estimates, Human Resources in
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Harris, J.R.; M.P. Todaro (1970), Migration, Unemployment and Development: A TwoSector Analysis, The American Economic Review, Volume 60, Issue 1 (1970), 126-142.
Heckman, J. (1979), Sample selection bias as a specification error, Econometrica 47 :
153-161
Lane, J.; G. Hakim; J. Miranda, (1999), Labour Market Analysis and Public Policy: The
Case of Morocco, The World Bank Economic Review, Volume 13, September 1999,
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Maddala, G.S. (1983), Limited Dependent and Qualitative variables in Econometrics,
Cambridge University Press, 1983.
Orivel, F. (1995), ducation Primaire et Croissance Economique en Afrique
Subsaharienne: les Conditions d'une Relation Efficace, Revue d'conomie de
dveloppement, 1/1995, 77-102.
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Efficiency in a Developing Country, The World Bank Research Observer, Vol. 13, No. 1
(February 1998), pp. 59-77.
Stiglitz, J. (1974), Alternative Theories of Wage Determination and Unemployment in
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Upadhyay, M.P. (1994), Accumulation of Human Capital in LDCs in the Presence of
Unemployment, Economica, New Series, Vol. 61, No. 243. (Aug., 1994), pp. 355-378.

Table 1: Evolution of Unemployment between 1971 and 2000

Urban
Rural
Total
1971 1982 1994 2002 1971 1982 1994 2002 1971 1982 1994 2002
Number
of
unemployed workers 216
(thousands)
Unemploy-ment rate
15.0
(%)
Men
14.4
Women
19.1

322 920 1,017 133 320 412 186 349 642 1,332 1,203
12.3 20.3 18.3 5.2 9.5 10.8 3.9 8.8 10.7 16.0 11.6
11.7 17.1 16.6 5.2 10.0 10.9 4.7 8.2 10.7 14.1 11.3
14.2 29.6 24.2 5.3 6.5 10.5 1.7 12.1 10.7 23.1 12.5
179

Applied Econometrics and International Development.

AEID.Vol. 6-1 (2006)

Table 2: Unemployment Rate by Highest Degree in 2002 (%)

Degree
%
None
5.6
Certificate of elementary education
20.7
Vocational training, specialisation (lower) level
35.6
Vocational training, qualification (medium) level 28.4
Secondary diploma
34.0
Technicians (higher level of vocational training) 18.0
University degree
32.2
Total
11.6
Source: Direction de la Statistique, Royaume du Maroc (2003).

Table 3: Preferred sector for searching employment, urban areas in 1998 (%)
Degree/Certificate

Any sector

Public
sector
1.17
6.12
36.22
42.31
41.35
21.97

Private
sector
38.57
27.95
8.14
6.41
25.99
31.76

Total

None
60.26
Elementary education
65.93
Secondary
55.64
University
51.29
Higher institute
32.65
Technicians (higher level of vocational training)
46.27
Vocational training, qualification (medium)
48.2
10.03
41.77
level
Vocational training, specialisation (medium)
42.78
4.12
level
53.11
Total
58.57
11.57
29.86
Note: These figures are calculated by the author based on the 1998 Moroccan Labor
Survey data file.

100
100
100
100
100
100
100
100
100
Force

Table 4: Descriptive Statistics

Variable
Age
Female
Single
Head of household
Born in rural area
Entered the L.F in or
after 1983
Education level:
Uneducated
Elementary, 1st stage
Elementary, 1st stage
+ V.T.
Elementary, 2nd stage
Elementary, 2nd stage

Whole sample
Mean
33.72 (11.11)
0.24
0.49
0.40
0.29

Unemployed
Mean
26.93 (7.27)
0.30
0.87
0.08
0.14

Non paid workers

Mean
35.21 (12.31)
0.18
0.41
0.47
0.36

Paid workers
Mean
35.46 (10.43)
0.26
0.40
0.49
0.30

0.58

0.88

0.47

0.53

0.24
0.29

0.08
0.25

0.35
0.34

0.23
0.26

0.01

0.01

0.01

0.00

0.14
0.03

0.19
0.06

0.15
0.02

0.12
0.03

180

Boudarbat, B.

+ V.T.
Secondary
Secondary + V.T.
University
University + V.T.
Degree/certificate
Uneducated or
elementary education
not completed
Elementary
V.T., Specialisation
(level 1)
V.T., Qualification
(level 2)
Secondary
University
V.T.,
Technician
(level 3)
Higher institutes
Employed
Paid workers (among
employed workers)
Public sector (among
employed workers)
Weekly hours
Wages (in MAD)

Unemployment, status in employment and wages in Morocco

0.10
0.07
0.08
0.05

0.14
0.08
0.15
0.04

0.08
0.02
0.03
0.01

0.10
0.10
0.08
0.08

0.51

0.32

0.67

0.47

0.26

0.34

0.25

0.23

0.01

0.02

0.01

0.01

0.05

0.09

0.02

0.06

0.03
0.04

0.06
0.10

0.02
0.01

0.03
0.04

0.07

0.06

0.01

0.12

0.02
0.81

0.01
0.00

0.01
1.00

0.04
1.00

0.58

0.00

1.00

0.22

0.00

0.37

53.72 (17.07)

47.74 (14.38)
2,382.79
(3,561.3)
19,351

# Observations
41,282
7,946
Notes : V.T.= Vocational training. Data are weighted.

13,985

Table 5a: Censored Bivariate Probit estimates

(1)

(2)

Constant

Employed
Std.
Coef.
Err.
1.031*
0.161

Paid worker
Std.
Coef.
Err.
0.338** 0.147

Employed
Std.
Coef.
Err.
0.943*
0.160

Age

0.019*

0.002

-0.003*

0.001

0.019*

0.002

Female
Born in rural areas
Single
Head of household
Year 1983
Education level:
Elementary, 1st stage
Elementary, 1st stage + V.T.

-0.011
0.150*
-0.641*
0.421*
0.002

0.019
0.022
0.026
0.028
0.029

0.265*
0.018
0.192*
0.106*
0.087*

0.018
0.017
0.022
0.022
0.023

0.015
0.199*
-0.640*
0.419*
-0.016

0.019
0.021
0.026
0.028
0.029

Paid worker
Std.
Coef.
Err.
0.422* 0.145
0.001
0.003*
0.240* 0.018
-0.022 0.016
0.196* 0.022
0.010* 0.022
0.107* 0.023

-0.167*
-0.506*

0.029
0.082

0.157*
0.170**

0.020
0.080

181

Applied Econometrics and International Development.

Elementary, 2nd stage
Elementary, 2nd stage + V.T.
Secondary
Secondary + V.T.
University
University + V.T.
Degree/Certificate:
Elementary
V.T., Specialisation
(lower level)
V.T., Qualification
(medium level)
Secondary
V.T., Technician
(higher level)
University
Higher institutes

12

Mean log L
# Observations

AEID.Vol. 6-1 (2006)

-0.365*
-0.815*
-0.547*
-0.578*
-0.908*
-0.314*

0.032
0.044
0.035
0.039
0.036
0.045

0.272*
0.806*
0.478*
1.243*
0.916*
1.384*

0.024
0.045
0.027
0.040
0.034
0.049

-0.313*

0.020

0.234*

0.017

-0.544*

0.078

0.274*

0.078

-0.651*

0.033

0.853*

0.039

-0.695*

0.039

0.748*

0.045

-0.264*

0.033

1.387*

0.041

-0.933*
0.213*

0.035
0.078

0.976*
0.838*

0.045
0.057

-0.920*
-0.89
41,28

0.028

-0.917*
-0.884
41,28

0.029

33,33

33,33

Notes: The reference group for education is Uneducated. * Significant at the level 1%. In
both equations, we control for 16 regions of residence. In addition, we control for the month of
observation in the employment equation.

Table 5b: Censored Bivariate Probit estimates

Constant
Age
Female
Born in rural areas
Single
Head of household
Year 1983
Degree/Certificate:
Elementary
V.T., Specialisation (lower level)
V.T., Qualification (medium level)
Secondary
V.T., Technician (higher level)
University
Higher institutes
Year 1983 x
Elementary
V.T., Specialisation (lower level)

Employed
Coef.
Std. Err.
0.7663*
0.1608
0.0194*
0.0016
0.0207
0.0189
0.2055*
0.0213
-0.6225*
0.0253
0.4166*
0.0283
0.1628*
0.0342

Paid worker
Coef.
Std. Err.
0.3047**
0.1440
-0.0022**
0.0010
0.2404*
0.0182
-0.0084
0.0159
0.1991*
0.0224
0.0991*
0.0226
0.2558*
0.0265

-0.1267*
-0.0703
-0.1050
-0.1209
0.5570*
0.1726
0.6234*

0.0427
0.2656
0.0957
0.1307
0.1067
0.1479
0.2263

0.4527*
0.1659
1.2777*
0.9835*
1.7621*
1.0726*
1.0780*

0.0272
0.1856
0.0760
0.0954
0.0689
0.0969
0.0839

-0.2145*
-0.5516**

0.0475
0.2763

-0.3586*
0.0574

0.0345
0.2055

182

Boudarbat, B.

Unemployment, status in employment and wages in Morocco

V.T., Qualification (medium level)

Secondary
V.T., Technician (higher level)
University
Higher institutes

-0.6311*
0.1023
-0.6261*
0.0882
-0.6523*
0.1368
-0.3546*
0.1075
-0.9750*
0.1122
-0.6404*
0.0853
-1.2137*
0.1518
-0.1788
0.1088
-0.4905**
0.2415
-0.4582*
0.1128
12
-0.8829*
0.0346
Mean log L
-0.8817
# Observations
41,282
33,336
Notes: The reference group for education is Uneducated. * Significant at the level 1%. **
Significant at the level 5%. In both equations, we control for 16 regions of residence. In
addition, we control for the month of observation in the employment equation.

Table 6a and 6b. Wage Equations

Table 6b (++)

Table 6a (+)
(1)

6.40*
0.03*
-0.00*
-0.13*
0.23*
-0.00

Std.
Err.
0.11
0.00
0.00
0.02
0.01
0.01

0.23*
0.42*
0.43*
0.76*
0.65*
1.01*
1.33*
1.23*

0.02
0.07
0.02
0.05
0.03
0.05
0.05
0.06

Coef.
Constant
Age
Age squared
Female
Public sector
log weekly hours
Education level:
Elementary 1
Elementary 1+ V.T.
Elementary 2
Elementary 2+ V.T.
Secondary
Secondary + V.T.
University
University + V.T.
Year 1983
Degree/Certificate:
Elementary
V.T., Specialisation (lower level)
V.T., Qualification (medium level)
Secondary
V.T., Technician (higher level )
University
Higher institutes
Year 1983 x
Elementary
V.T., Specialisation (lower level)

(2)

183

Coef.
6.41*
0.03*
-0.00*
-0.17*
0.24*
0.017

Std.
Err.
0.10
0.00
0.00
0.01
0.01
0.01

0.34*
0.49*
0.60*
0.75*
0.87*
1.22*
1.27*

0.01
0.06
0.04
0.04
0.04
0.05
0.04

Coef.
6.23*
0.04*
-0.00*
-0.18*
0.23*
0.02

Std.
Err.
0.11
0.00
0.00
0.01
0.01
0.01

0.08*

0.02

0.43*
0.44*
0.60*
0.96*
0.86*
1.40*
1.35*

0.02
0.11
0.05
0.06
0.05
0.06
0.05

-0.19*
-0.10

0.03
0.13

Applied Econometrics and International Development.

AEID.Vol. 6-1 (2006)

V.T., Qualification (medium level)

-0.09**
0.04
Secondary
-0.37*
0.06
V.T., Technician (higher level )
-0.06**
0.03
University
-0.34*
0.05
Higher institutes
-0.19*
0.05
(paid
worker)
0.52*
0.08
0.34*
0.06
0.29*
0.06
1
-0.59*
0.04
-0.46*
0.03
-0.41*
0.03
2 (employed)
Adj R-squared
0.54
0.55
0.55
S.E.E.
0.69
0.58
0.55
# Observations
16,91
16,91
16,911
(+) The reference group for education is Uneducated. * Significant at the level 1%. In both
equations, we control for 16 regions of residence. Elementary 1, 2, 3, correspond, respectively
to 1st , 2nd and 3rd stage. (++) The reference group for education is Uneducated. * Significant at
the level 1%. ** Significant at the level 5%. In both equations, we control for 16 regions of
residence.
Figure 1: Share of Workers with University Education in the Labour Force and the
Unemployed Population, Urban Areas
25

20
Share in the
labour force

10

Share in the
unemployed
population

(%)

15

0
1975

1980

1985

1990

1995

2000

2005

Figure 2: Share of Uneducated Workers in the Labour Force and the Unemployed Population,
Urban Areas
60
50
Share in the
labour force

(%)

40
30

Share in the
unemployed
population

20
10
0
1975

1980

1985

1990

1995

2000

2005

Sources: Direction de la Statistique, Royaume du Maroc (1999, 2000, 2003).

______________________________
Journal published by the Euro-American Association of Economic
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184

Development.