Assessing the Effects of Trade Liberalization on Wage Inequalities in Egypt: A Microsimulation Analysis

Abstract

This article aims at evaluating the liberalization policies' effects on wage inequality in Egypt. Gender, geographical, and skill dimensions are used to break down labor into eight segments. This article simulates the effect of a reduction of tariffs imposed on imports by 50%. Results show that the effect of trade liberalization policies depends on the characteristics of the individual and the working sector. Thanks to the expansion of textiles, garments, chemicals, and services, inequality decreases for urban and rural skilled men as well as skilled and unskilled women working in urban areas. By contrast, inequality increases among unskilled men and skilled women in rural areas.

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