Trade Liberalization and the Skill Composition of Migrant Flows: the Case of Morocco

Fida Karam ()

No 595, Working Papers from Economic Research Forum

Abstract: Empirically, little is known about the effects of trade liberalization on the skill composition of emigration flows in developing countries. The available computational literature has focused, for the most part, on United States-Mexico migration patterns after the creation of the North American Free Trade Agreement. More recent works have investigated the relation between trade liberalization and emigration in Morocco, without looking to the impact of trade liberalization on skilled and unskilled migration. This paper investigates the effects of trade liberalization on the skill composition of migrant flows in Morocco. Because trade agreements involve substantial changes in prices, resource allocation and income, they also affect migration incentives, when migration is motivated by the wage differential between receiving and sending countries. Trade liberalization will be problematic for an unskilled-labor abundant country like Morocco, if it gives incentives to skilled workers to move across borders. An appealing way of addressing this topic is to formulate a dynamic computable general equilibrium model that illustrates the transmission channels by which trade liberalization affects local wages and migration incentives. The model is calibrated on the Moroccan Social Accounting Matrix (SAM) of 2003. The results show that both the free trade agreement with the European Union and multilateral liberalization reduce skilled and unskilled migration flows, but is more pronounced in the multilateral case.

Pages: 26
Date: 2011-01-07, Revised 2011-01-07
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