Urbanization, inequality and economic growth: an empirical investigation of the Moroccan regions

Abstract

According to the United Nations, the most rapidly urbanizing regions in the world are Africa and Asia. It predicts that by 2050, these regions will become 56% and 64% urban respectively.  At the same time, over the past decades, many African and Asian countries and regions have experienced an increase in income inequality. While some researchers argue that urbanization worsens income inequality, others maintain that the relationship is not linear and depends on a stage of development. Indeed, Morocco has undergone a sustained urbanization process in all its regions over the last decades, however, Moroccan regions have been marked by inequalities in all levels. In this regard, this paper analyses the relationship between inequality, economic growth and the urbanization process in Morocco, which remains largely understudied, based on the Kuznets hypothesis and using panel data on ten Moroccan regions for the period 2010/2017. The data used in this paper come from the Haut-Commissariat au Plan in the framework of the General Census of Population and Housing (RGPH), and the National Survey of Household Consumption and Expenditure (ENCDM).

With the application of the ordinary least square method on 80 observations, the results of the fixed effect model confirm the inverted U-shaped relationship between inequality and GDP per capita. However, the relationship found between urbanization and inequality is opposite to the one put forward by Kuznets. Indeed, rapid urbanisation can lead to an increase in inequality.