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Research Paper

The hysteresis of the unemployment rate in a middle income country: the case of Morocco
April 8, 2024

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Unemployment hysteresis, where joblessness persists even after economic improvement, reveals the lasting impact of initial downturns. We delve into this puzzle in Morocco from 1999Q1 to 2019Q3, using four methods to examine the non-accelerating inflation rate of unemployment (NAIRU) time series for unit root causes. Across all methods, we consistently find a hysteresis effect. We also explore how inflation and NAIRU interact, although results are mixed. This suggests policies focusing on reform, training, and learning could help reduce long-term joblessness. Our findings shed light on unemployment's enduring effects, even during recoveries, hinting at possible shifts in job markets. Our study contributes to global science by examining labor market hysteresis in Morocco, offering insights into policy implications for both Morocco and other developing nations. By examining how economic policies impact unemployment over time, we provide valuable guidance for policymakers grappling with similar challenges. Our research underscores the need to consider local contexts when crafting effective economic policies for developing economies.