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Trade Liberalization and Employment in the Moroccan Manufacturing Sector

Author

Listed:
  • Lahcen ACHY

    (INSEA, Rabat, Morocco)

  • Khalid SEKKAT

    (ULB, Brussels, Belgium)

Abstract

This paper uses firm level data to investigate the impact of trade liberalization on manufacturing sector employment in Morocco. This paper extends the existing research in various dimensions. First, it analyses the effect of trade openness on different skill levels of the manufacturing labor force. Second, the paper investigates the role of technology in explaining the magnitude of employment response following trade liberalization reforms. Our empirical results indicate that technology, as measured by capital intensity, and the share of new capital matters relatively more than trade in accounting for employment changes. In terms of policy implications, trade protection does not appear to be an effective tool in terms of saving jobs. Moreover, Moroccan commitments to further liberalize its trade means that manufacturing firms will have to face more competitive pressures on both domestic and foreign markets. Those firms that are endowed with upgraded technology are more likely to maintain or potentially raise their market shares, and hence create more jobs. Our results indicate that openness to foreign trade induces a significant skill composition effect. However, it also appears that skilled labor demand is highly sensitive to relative wages, which is consistent with the dominance of low value added products in the Moroccan manufacturing industries for which labor cost largely matters. The challenge for policy-makers is to design an appropriate support policies that stimulate domestic firms to invest and upgrade their technologies, ensure some degree of labor market flexibility, and create a business environment attractive for foreign investment.

Suggested Citation

  • Lahcen ACHY & Khalid SEKKAT, 2005. "Trade Liberalization and Employment in the Moroccan Manufacturing Sector," International Trade 0512011, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0512011
    Note: Type of Document - pdf; pages: 31. Trade liberalization and employment
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    References listed on IDEAS

    as
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    Cited by:

    1. Mouna Cherkaoui & Ayache Khellaf & Abdelaziz Nihou, 2011. "The Price Effect of Tariff Liberalization in Morocco: Measuring the Impact on Household Welfare," Working Papers 637, Economic Research Forum, revised 10 Jan 2011.
    2. Gupta, Avnesh Kumar, 2014. "Trade Liberalisation and Its Impact on Employment: An Analysis of Indian Experiences (With Special References of Indian Manufacturing Industries)," MPRA Paper 80030, University Library of Munich, Germany, revised 01 Mar 2014.

    More about this item

    Keywords

    Trade liberalization; Employment; Firm-level analysis;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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