Is Economic Growth Really Jobless? Empirical Evidence from North Africa

Abstract

North African countries recorded the highest youth unemployment rate in the World during the latest years. The main causes for that situation continue to be at the forefront of the debate among economists, sociologists and policymakers. This paper contributes to the existing literature by estimating the Okun’s law for four North African economies over the period 1991–2013. It examines the reaction of unemployment rate to output for different groups of the labor force as determined by age-group and gender. In addition to the basic linear specification, we present estimates of the Okun’s coefficients by taking into account the potential presence of structural breaks, threshold and asymmetry. The empirical investigation highlights the presence of mixed findings regarding the significance, magnitude and stability of coefficients for the different groups of the labor force and countries. Policy implications are correspondingly drawn.

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Fig. 1

Source: The authors, based on data from the ILOSTAT database

Fig. 2

Source: The authors, based on data from the Key Indicators of the Labour Market database

Fig. 3

Source: The authors, based on data from the Key Indicators of the Labour Market database

Fig. 4

Source: The authors, based on data from the Key Indicators of the Labour Market database

Fig. 5

Source: The authors, based on data from the Doing Business database

Notes

  1. 1.

    The author employs four filtering methods, namely the quadratic trend, the Hodrick–Prescott, the Band-Pass and the structural time series model.

  2. 2.

    The three components are: consumption growth, investment growth and export growth.

  3. 3.

    The index ranges from 0 to 100, where higher values indicate more rigid regulations.

  4. 4.

    Informal employment includes self-employment in informal enterprises, generally small and not registered, and paid employment that is not formally declared, without legal contracts or social protections (Danish Trade Union Council for International Development and Cooperation 2018).

  5. 5.

    See Fig. 6 in the “Appendix.”

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Acknowledgements

The authors are grateful to the editor of the journal, Nauro Campos, and an anonymous referee for invaluable comments and suggestions that substantially improved the manuscript’s content. Any remaining errors are solely the authors’ responsibility.

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Correspondence to Zouhair Mrabet.

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Appendix

Appendix

See Fig. 6 and Table 7.

Fig. 6
figure6

Source: The authors, based on data from International Labour Organization (2002)

Informal employment in the non-agricultural sector in North Africa, 1994–2000.

Table 7 Results of KPSS unit root test

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Ben-Salha, O., Mrabet, Z. Is Economic Growth Really Jobless? Empirical Evidence from North Africa. Comp Econ Stud 61, 598–624 (2019). https://doi.org/10.1057/s41294-018-00082-9

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Keywords

  • Economic growth
  • Unemployment
  • Okun’s law
  • North Africa

JEL Classification

  • E24
  • E32
  • J01