Regional Income Inequality in Egypt: Evolution and Implications for Sustainable Development Goal 10

Income distribution is instrumental in improving living standards and it is part of the UN’s SDG 10 on the reduction of inequality within and among countries. Yet existing research on income inequality in developing economies has scarcely looked at the regional dimension. This is important, as progress in reducing income inequality at national level can only be partially successful if a country presents large regional variations, where very unequal regions coexist alongside relatively equal ones. This paper contributes to filling this gap with a case study on Egypt. It also adds to our knowledge of income inequality in the Arab region, an area that has not seen extensive empirical analysis. Using newly assembled Luxemburg Income Study (LIS) data and a range of inequality measures, the analysis offers three findings. First, the distribution of income within Egyptian regions has become more unequal during 1999–2015. Second, there has been convergence: differences in income inequality within Egyptian regions tended to reduce, but less unequal regions are converging to similar levels of inequality with more unequal regions. Third, the increase in regional inequality is also attributable to a decrease in the income share of the bottom 40% and an increase in the proportion of people living below 50% of median income. Hence, supporting geographically diffused progress on the first two targets of SDG 10 may crucially depend on reversing the trend of increasing income inequality of the pre-SDG period.