The role of education in reducing income disparities in Morocco: empirical evidence from the ARDL approach

Abstract

This paper seeks to provide empirical evidence on the contribution of human capital, measured by education, to reducing income inequalities in Morocco over the period from 1984 to 2015. The analysis of the dynamics of variables related to education and income disparities has revealed two major findings. Firstly, the educational level of the Moroccan labor force is notably weak, with an average of barely six years of schooling, as well as the persistence of educational inequalities over time and across regions, along with high dropout and repetition rates. These factors suggest a limited contribution of human capital accumulation of reducing income disparities in Morocco. Secondly, the persistence of income inequalities between different social classes, where a minority of the population holds a substantial share of wealth, is an undeniable reality. Furthermore, the ARDL time series estimation technique has yielded important results. In the short term, educational disparities are likely to make income distribution more egalitarian. Regarding the expansion of education, measured by the average number of years of schooling, it has no significant immediate effect on the dependent variable. This result suggests that wage inequalities in Morocco are in a "composition" phase and have not yet reached a "compression" phase. However, in the long-term relationship, the only variable having a significant effect on the dependent variable is the average number of years of schooling. Thus, a 1% increase in the average level of education reduces educational inequalities by 0.05%. Consequently, the estimated relationship suggests that an increase in investment in education in Morocco would not only raise the average level of schooling but also reduce educational inequalities, both of which are likely to reduce income inequalities.

Keywords : Educational inequality, level of education, income inequality, Morocco, ARDL.

Classification JEL : D30, I21, O55

Paper type : Empirical Research