# **1. Introduction**

The positive relationship between trade openness and higher gross domestic product (GDP) per capita is well-established in academic literature (Frankel and Romer 1999 and Norgier and Siscart 2005). Trade is also associated with falling poverty, especially in developing countries (Harrison 2007). On the micro side, these positive relationships are at least partially explained by the increase in labor demand that comes with exports (Robertson et al. 2009 and Lopez-Acevedo et al. 2016). Almost like a mirror of developed countries (where important studies show an adverse effect of imports on local labor markets), recent studies show that developing country local labor markets benefit from rising exports. In several developing countries, exports are associated with improving labor market outcomes, such as increased wages, lower informality rates, and greater female labor force participation (FLFP) (Artuc et al. 2019, Robertson et al. 2020, and Robertson et al. 2021).

If exports increase labor demand, as has been observed in other developing countries, then finding ways to encourage exports seems like a good policy for developing countries. Motivated perhaps in part by the encouraging experiences of other countries, Morocco pursued trade agreements in an attempt to increase exports.

As perhaps expected by many economists, Morocco’s trade liberalization has been followed by macroeconomic growth over the last two decades. Between 2000 and 2019 living standards have considerably improved: per capita income almost doubled, and the overall poverty rate fell to almost one-third of its 2000 level. Literacy rates, health outcomes, and access to basic utilities have all improved (World Bank, 2023). The working-age population is expanding, representing a potential “demographic window” to support a jobs-led growth policy for the next two decades (Lopez-Acevedo et al. 2021a).

Economic growth, however, has not coincided with enough jobs to offset the rising population and the gains of growth have not been equally shared. Two key problems persist. First, the Moroccan informality rate, despite decreasing, is still among the highest in the Middle East and North Africa (MENA) region. Between 2001-2018, the informality rate decreased only by 7.8 percentage points, from 85.1 percent to 77.2 percent (LopezAcevedo et al., 2023). Second, FLFP is now lower than two decades ago and considerably lower than OECD countries and middle-income economies (Lopez-Acevedo et al., 2023; Lopez-Acevedo et al. 2021b). A gap in LFP of nearly 50 percent persists between men and women. Despite advances in the country’s legal system that guarantees equal rights for men and women, the latter still face great inequality and discrimination that limits access to economic opportunities (Chauffour, 2018; Islam et al., 2022). The lack of progress in these labor-market outcomes following the implementation of trade agreements raises several questions.

- First, have trade agreements successfully boosted trade flows in Morocco? For this, we present gravity model estimates that show that most of Morocco’s trade agreements are associated with a larger change in trade than the “average”

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