Trade and Job Reallocation: Evidence for Morocco

Abstract In this paper we explore the dynamics of labor market adjustment in Morocco with a particular emphasis on the role of trade liberalization. We utilize the methodology of Davis and Haltiwanger (1990) which enables us to distinguish between job creation, job destruction, overall levels of turnover, and the extent of movement within and between sectors. The results suggest that while average levels of employment growth are typically extremely low, this masks considerable movement in the labor market. The Moroccan labor market is characterized by high levels of simultaneous job creation and job destruction as well as high levels of turnover. Our decompositions show the importance of both "between" and "within" job movements, suggesting that Morocco is changing its specialization pattern. The regression analysis suggests that increasing trade openness, as well as technological change have significantly impacted on the Moroccan labor market and in particular with regards to job creation as opposed to job destruction. In turn this suggests that rigidities in the Moroccan labor market may be impeding the long-run adjustment process, but which in turn is likely to lessen the short-run adjustment costs for workers. Arabic Abstract: