Date of this Version
Journal of Labor Economics
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.
Currie, J., & Harrison, A. E. (1997). Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco. Journal of Labor Economics, 15 (S3), S44-S71. http://dx.doi.org/10.1086/209876
Date Posted: 27 November 2017
This document has been peer reviewed.