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.