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The Arab inequality puzzle: the role of income sources in Egypt and Tunisia

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  • Caroline Krafft
  • Elizabeth E. Davis

Abstract

Egypt and Tunisia are perceived to have high levels of inequality, yet based on standard measures, inequality in these two countries is not unusually high. In this study we explore a different dimension of inequality in Egypt and Tunisia by using a more complete measure of income and decomposing inequality by income sources (factor components). We find that higher-income households have more income sources than lower-income ones. Informal wage work and earnings from household enterprises are more common in Egypt than Tunisia, while formal wage work, pensions, and social assistance are more common in Tunisia. Social assistance does little to offset income inequality in either country. Enterprise earnings (in Egypt) and agricultural earnings (in Tunisia) as well as rent and other capital income in both countries play a large role in inequality. High inequality in these non-wage income sources and unequal access to income sources tied to wealth and capital may help explain why inequality is perceived to be high.

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  • Caroline Krafft & Elizabeth E. Davis, 2021. "The Arab inequality puzzle: the role of income sources in Egypt and Tunisia," Middle East Development Journal, Taylor & Francis Journals, vol. 13(1), pages 1-26, January.
    • Handle: RePEc:taf:rmdjxx:v:13:y:2021:i:1:p:1-26
    DOI: 10.1080/17938120.2021.1898233
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    Cited by:

    1. Ibrahim Mohamed Ali Ali, 2023. "Income inequality, economic growth, and structural changes in Egypt: new insights from quantile cointegration approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 379-407, February.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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