Structural Transformation and Youth Labor Market Dynamics in Morocco: An Econometric Analysis of Employment Patterns, Gender Disparities, and Sectoral Transitions

Abstract The research paper explores the multifaceted nature of youth labor market performance in Morocco, with the aim of studying the patterns of employment, gender differences and occupational changes among the youth aged between 15-35 years. We use a rich econometric model that includes a logistic regression model, multinomial logit model, Oaxaca-Blinder decomposition, and machine learning models to examine the probability of employment, sector allocation, and wage determination using microdata of the Moroccan High Commission for Planning (HCP) of the Labor Force Survey (2015-2024) and recent 2026 cross-section data. We find that there are still gender disparities in the labor market (female employment is 32 % lower than the male) with significant urban-rural differences in employment, and acute education-employment mismatches especially among the tertiary trained youth. About 45% of young workers are absorbed in the informal sector: the segment is heavily heterogeneous in terms of gender and level of education. Instrumental variable estimation provides the solution to the issue of endogeneity; we show that family background and regional labor market conditions play a significant role in determining youth employment outcomes. Decomposition analysis indicates that differences in gender employment gap can be explained by differences in discrimination / preferences (68% of the gender employment gap) and not by differences in endowments. Predictions of machine learning determine education quality, sector-related skills, and geographic mobility as crucial predictors of employment. Policy implications include active labor market policies that are specific, vocational education and training in line with sectoral needs, gender-based policies and structural reforms to ensure reduced informality and improvement of job quality among the younger Moroccan population. Keywords Youth unemployment, labor market transitions, gender gap, informality, Morocco, econometric analysis, Oaxaca decomposition