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GTAP Resource #6518

"Assessing The Socioeconomic impact of income inequality in Morocco Using a CGE Model "
by Raouf, Radouane and Zakaria Chtouki

The objective of this paper is to determine the impact of an increase in household income inequality on a developing economy such as Morocco. Using a static computable general equilibrium (CGE) model calibrated on 2016’s Moroccan Social Accounting Matrix (SAM), this study aims to simulate the shock of the variation of the level of inequality between income households on socioeconomic variables. This shock is applied by differentiating the direct taxation of the income of each category of representative household (namely, rural poor households, urban poor households, rural rich households, and urban rich households). Among the main results, we estimate that a 1% increase in household income inequality leads to a (-1,60%) drop in GDP at market prices, giving the loss of (-1,93%) in the value added of the primary sector (agriculture and fishing). This economic underperformance is related to the massive drop in final household consumption. On the social impact, we note that this increase of income inequality causes a decline in access to basic services for poor households of about 3% for education and private health services as well as public services. However, we consider that an appropriate fiscal and budgetary policy (increase in public expenditure and an additional tax exemption on the incomes of poor households) can lessen the harmful effects of income inequality thus improve the social and economic outcomes.

Resource Details (Export Citation) GTAP Keywords
Category: 2022 Conference Paper
Status: Not published
By/In: Presented during the 25th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2022
Created: Raouf, R. (4/12/2022)
Updated: Batta, G. (6/14/2022)
Visits: 555
- Economic analysis of poverty
- Economic growth
- Africa (North)

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