The IMF Working Papers series is designed to make IMF staff research available to a wide audience. With nearly 300 released each year, working papers cover a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
This paper analyzes the determinants of labor market performance in Algeria. When the model is estimated with panel data on a sample of MENA and transition countries for 1995- 2005, the results suggest that lower growth in labor productivity in Algeria is associated with higher unemployment than the sample average, though recent positive terms of trade shocks have helped Algeria reduce the differential. Labor market rigidities and labor taxation do not seem to explain why unemployment is higher in Algeria than in other countries. The results are robust to various panel econometric methods and instrumental variable estimates.