The Impact Of Labor Market Regulations On Economic Growth In Maghreb Countries

The present paper examines the effect of labor market regulations on economic growth by shedding light on three Maghreb countries: Algeria, Morocco and Tunisia over the period 2000-2011, through the use of panel data analysis. According to Hausman test, the fixed effects model is the most suitable one, and it illustrates that the labor market regulation index (LMR) displays a positive and highly statistically significant influence on economic growth in Maghreb countries, because the higher labor freedom leads to lower unemployment rate, and thus raises the productivity and boosts the economic growth in the selected countries. Also, the empirical results reveal that there is a negative relationship between unemployment and economic growth in the sample under study. Moreover, the coefficient of (UNEMP) is statistically significant at the 1% level of significance, and this is consistent with theory. Based on these findings, it could be concluded that there is a great opportunity for Maghreb countries to achieve high growth rates by adopting flexible labor market policies.