While most of the migration literature implicitly assumes that the main policy levers on migrant behaviour are in the hands of the receiving countries, in Discussion Paper No. 1198,Research Fellows Riccardo. Faini and Jaime de Melo set out to assess the effects on emigration flows of trade liberalization by the sending countries. They attempt to link trade policies with domestic employment and the supply of migrant workers in the sending countries, using the case study of Morocco, a substantial provider of migrants to Europe, and a country that has recently undergone comprehensive trade liberalization. They develop a simple econometric model to assess how trade liberalization affects domestic employment, output, income, and the fundamental determinants of migrant supply of sending countries in the short- and medium-run.

The authors' main findings are that labour demand is positively related to the export orientation of the industrial sector; that emigration from Morocco is negatively associated with the rate of employment creation in the industrial sector; and that the lowering of import barriers will induce a depreciation of the real exchange rate, thereby increasing imported input prices and depressing output supply. Simulations for this last aspect suggest that, on balance, the real depreciation engendered by the trade liberalization process has a boosting effect on employment and hence leads to lower migration. The cushioning of trade liberalization through foreign support appears to be a mixed blessing, since, on the one hand, it helps to alleviate the foreign exchange constraint, but on the other hand, it leads to a less pronounced depreciation of the real exchange rate, causing less pronounced export growth and employment expansion.

Trade Liberalization, Employment and Migration. Some Simulations for Morocco
Riccardo Faini and Jaime de Melo

Discussion Paper No. 1198, August 1995 (HR/IT)