Trade and Job Reallocation: Evidence for Morocco

In this paper we explore the dynamics of labour market adjustment in Morocco with a particular emphasis on the role of trade liberalisation. We utilise 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 labour market. The Moroccan labour market is characterised 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 specialisation pattern. The regression analysis suggests that increasing trade openness, as well as technological change have significantly impacted on the Moroccan labour market and in particular with regard to job creation as opposed to job destruction. In turn this suggests that rigidities in the Moroccan labour market may be impeding the long run adjustment process, but which in turn is likely to lessen the short-run adjustment costs for workers