Why Is Tunisia’s Unemployment So High? Evidence From Policy Factors

October 27, 2023

Preview Citation

Format: Chicago

Aymen Belgacem, and Jérôme Vacher. Why Is Tunisia’s Unemployment So High? Evidence From Policy Factors, (USA: International Monetary Fund, 2023) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Tunisia has one of the highest unemployment rates within the Middle East and Central Asia. We look at the extent to which institutional factors explain those high unemployment levels. We also assess unemployment cyclicality, by looking at the determinants of labor market sensitivity to the output gap. We find that during the last decade the deterioration of institutional factors that affect labor demand explain not only about a quarter of the unemployment rate increase in Tunisia, but also Tunisia’s excess sensitivity of unemployment to the output gap. Our results suggest that an improved business environment and product market competition, increased labor market flexibility as well as reduced financial constraints and informality would help reduce Tunisia’s unemployment.

Subject: Employment protection, Labor, Labor market regulations, Labor markets, Unemployment, Unemployment rate

Keywords: Employment protection, Global, Labor Market, Labor market regulations, Labor market sensitivity, Labor markets, Middle East and Central Asia, North Africa, Okun's coefficient, Product market regulation, Sensitivity to the output gap, Tunisia, Tunisia's unemployment, Unemployment, Unemployment cyclicality, Unemployment rate

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/219
Stock No:

WPIEA2023219
ISBN:

9798400257025
ISSN:

1018-5941

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