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Trade Liberalization, Employment and Migration. Some Simulations for Morocco

Author

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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.

Suggested Citation

  • de Melo, Jaime & Faini, Riccardo, 1995. "Trade Liberalization, Employment and Migration. Some Simulations for Morocco," CEPR Discussion Papers 1198, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1198
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    Citations

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    Cited by:

    1. Kar, Saibal & Marjit, Sugata, 2004. "Wages, labour mobility and international trade," MPRA Paper 24101, University Library of Munich, Germany.
    2. 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. 13(1), pages 5-51.
    3. Robert E. 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. 13(4), pages 123-171.
    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. 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.
    6. Mohamed Bouzahzah & Abid Ihadiyan, 2000. "Libre échange et migration marocaine: Une approche par l'équilibre général calculable," Working Papers 2027, Economic Research Forum, revised 09 2000.

    More about this item

    Keywords

    Migration; Trade Liberalization;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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