Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco

Janet Currie and Ann Harrison

Chapter 2 in Globalization, Firms, and Workers, 2022, pp 15-42 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We examine the impact of recent trade reforms. Although employment in the average private sector manufacturing firm was unaffected, there were significant employment losses to exporters and highly affected firms. Parastatals increased employment by hiring low-paid temporary workers. Many firms did not adjust wages or employment. We examine two possible explanations. First, barriers to labor market mobility could have impeded adjustment. Second, we develop a model of labor demand which allows for imperfect competition and endogenous technological change. Our results suggest that although labor markets were flexible, many firms cut profit margins and raised productivity rather than reducing employment.

Keywords: Globalization; Trade Reform; Foreign Direct Investment; Labour Markets; Employment; Wages; Offshoring; Innovation; Credit Constraints; Industrial Policy; Labour Rights Activism (search for similar items in EconPapers)
JEL-codes: F02 F6 F63 (search for similar items in EconPapers)
Date: 2022
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Journal Article: Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco (1997)
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