Digitalization, job quality, and worker dismissals in a developing country: Evidence from formal Moroccan establishments

This study examines the associations between digitalization, job quality, and worker dismissals in 598 formal private establishments in Morocco covered by the 2023 World Bank Enterprise Survey. Digital intensity is measured using a latent score constructed from the presence of a website, the use of electronic payments, and the use of foreign-licensed technology. Job quality is captured through a formative index combining average labor cost per full-time equivalent, social protection, formal training, and contractual stability. The analysis employs linear and binary-response models, a Karlson–Holm–Breen decomposition, and joint-equation estimation. A one-standard-deviation increase in digital intensity is associated with a 0.09-standard-deviation increase in job quality, driven mainly by formal training and social protection. It is also associated with an approximately two-percentage-point increase in the probability that an establishment dismissed at least one permanent worker, although this estimate is less statistically precise. Quality certification is more prevalent among more digitally intensive establishments and is associated with a lower propensity for dismissals; the negative indirect association through certification partially offsets the positive direct association. Joint-equation estimates also indicate a negative residual correlation between the two equations, with moderate statistical support. Sector-specific estimates suggest a more pronounced association with job quality in manufacturing and with dismissals in services, although interaction tests do not statistically confirm these differences. These findings highlight the ambivalent relationship between digital transformation and employment conditions, as well as the importance of the organizational practices accompanying it.