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Trade Liberalization, Employment and Migration. Some Simulations for Morocco

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  • de Melo, Jaime
  • Faini, Riccardo

Abstract

We assess the impact on emigration flows of trade liberalization in a sending country. The paper adopts a case study approach focusing on Morocco, which is well suited for the purpose in hand as it has been a substantial provider of migrants to Europe and has recently undergone a fairly comprehensive trade liberalization. We develop a simple macroeconometric model to assess how trade liberalization affects employment, output and income; the fundamental determinants of migrant supply in the sending countries in the short to medium run. We find that trade liberalization will free pent-up demand for imports and induce a real exchange rate depreciation. In turn, a lower real exchange rate will depress output and employment on the one hand, but boost labour-intensive exports and labour demand on the other. Our simulations suggest that the latter effect dominates so that trade liberalization is found to promote employment creation and through this channel, discourage migrations even in the short run. If trade liberalization is supported from abroad through a foreign grant, however, our results show that the real exchange rate will depreciate less, export expansion will be more limited and migrations may even increase.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1198.

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Date of creation: Aug 1995
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Handle: RePEc:cpr:ceprdp:1198

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Related research

Keywords: Migration; Trade Liberalization;

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Cited by:
  1. RobertE. B. Lucas, 2005. "Migration internationale vers les pays à haut revenu : quelles conséquences pour le développement économique des pays d'origine ?," Revue d’économie du développement, De Boeck Université, vol. 19(4), pages 123-171.
  2. Orbeta, Aniceto Jr. C., 2002. "Globalization and Employment: The Impact of Trade on Employment Level and Structure in the Philippines," Discussion Papers DP 2002-04, Philippine Institute for Development Studies.
  3. Kar, Saibal & Marjit, Sugata, 2004. "Wages, labour mobility and international trade," MPRA Paper 24101, University Library of Munich, Germany.
  4. Agenor, Pierre-Richard & Aynaoui, Karim El, 2003. "Labor market policies and unemployment in Morocco : a quantitative analysis," Policy Research Working Paper Series 3091, The World Bank.
  5. Pierre-Richard Agénor & Karim El Aynaoui, 2005. "Politiques du marché du travail et chômage au Maroc : une analyse quantitative," Revue d’économie du développement, De Boeck Université, vol. 19(1), pages 5-51.

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