Trade and job reallocation: evidence for Morocco

This paper explores the dynamics of labour market adjustment in Morocco with an emphasis on the role of trade liberalisation and labour productivity change. We utilise the methodology of Davis and Haltiwanger (1990, 1992) which distinguishes 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 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 labour productivity have significantly impacted on the Moroccan labour market both through the process of hiring and firing as well as firm entry and exit. We also show that sectoral heterogeneity matters, particularly in relationship to exporting.