quantitative measures of relative deprivation can be adapted to incorporate self-selection mechanisms of the reference groups (Verme and Izem, 2008, Silber and Verme, 2011), an issue particularly relevant if we want to better understand how feelings of deprivation can be generated among marginalized groups in society.

The reference group is one of the key elements in understanding individual identity and self-assessment. In their seminal paper on economics and identity Akerlof and Kranton (2000) show how identity - ‘a person’s sense of self’ - can be used to explain human behavior that would otherwise conflict with standard utility theory. As stated by the authors, “ _Identity can account for many phenomena that current economics cannot well explain. It can comfortably resolve, for example, why some women oppose ‘‘women’s rights,’’ as seen in microcosm when Betty Friedan was ostracized by fellow suburban housewives for writing The Feminine Mystique. Other problems such as ethnic and racial conflict, discrimination, intractable labor disputes, and separatist politics all invite an identity-based analysis.”_ (p. 715). In this framework, identity is based on social categories, and in turn, social categories can be defined along personal characteristics such as gender, age, wealth, ethnicity, or location. Individuals belong to sets of social categories that delineate their own identity and these categories imply standard ‘prescriptions’ or behavioral norms. Therefore, identity is defined by the reference group - the group of people that individuals feel they belong to - and the reference group influences the expected behavior.

Akerlof and Kranton (2000) note how important this aspect is in understanding gender differences in labor force participation, the main focus of this paper. If society views women’s role as “housewives” and men’s role as “breadwinner”, women would be hesitant to join the labor force in greater numbers as that could “evoke anxiety and discomfort in oneself” while males would see female participation in the labor force as a “threat” to their own male identity. To the degree these factors influence women’s participation decisions, they can help to explain why female labor force participation rates remain so low and at the same time why many women may not feel as distressed by this outcome: _“Similarly women’s assumed lower desire for labor force participation (as in Mincer and Polachek {1974}, Bulow and Summers {1986}, and Lazear and Rosen {1990}) can be understood as the result of their identity as homemakers.”_ (Akerlof and Kranton, 2000, p. 732).

Based on these premises, this paper will draw on a recent literature that explores how the inclusion of the reference group into measures of relative deprivation can help to explain the apparent mismatch between objective statuses of labor deprivation and subjective perceptions of these same statuses. This is an important issue to understand in designing economic policies that aim to integrate women in the labor market. The empirical analysis of this paper is based on the Morocco Household and Youth Survey (MHYS) 2009-2010.

The paper begins by examining spatial inequality and relative deprivation across households using standard welfare measures and focusing on the rural-urban divide, one of the salient features of the Moroccan society. Our results conform to previous studies finding that the urban-rural divide in Morocco is very large by world standards, with rural areas showing much lower income levels. This is a recurrent finding in North-Africa and the Middle-East but also one that is at odds with the fact that urban areas tend to be louder when it comes to social and economic claims.

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