Dynamic Relationship between Migration, Unemployment, and Economic Growth in Morocco: Evidence from Cointegration and VECM Analysis

Abstract

This study investigates the dynamic relationships between net migration, the unemployment rate, and GDP per capita in Morocco using a Vector Error Correction Model (VECM) with annual data from 1991 to 2024. The research aims to fill a notable gap in the existing literature by examining the long-run equilibrium relationships and short-run dynamics among these key macroeconomic variables. Our findings reveal that all three variables are integrated of order one, I(1), and share a single, stable long-run equilibrium relationship. The long-run analysis demonstrates that net migration has a significant and positive effect on GDP per capita, while the unemployment rate has a negative effect. These results are consistent with established economic theories, such as the “migration-led growth” hypothesis and Okun's Law. The short-run dynamics indicate that GDP per capita actively adjusts to restore equilibrium following a shock, while both net migration and unemployment appear to be weakly exogenous, responding very little to short-run deviations from the long-run path. This suggests that migration flows and labor market dynamics in Morocco are primarily driven by their own inertia and factors external to the immediate economic system. In conclusion, this paper provides robust empirical evidence that net migration plays a vital and positive role in Morocco's long-term economic growth, while high unemployment acts as a persistent drag on per-capita output. The findings offer important policy implications for fostering sustainable economic development through well-managed migration and targeted employment strategies.