On Trade Policies and Wage Disparity: Evidence from Egyptian Microeconomic Data

This paper proposes an empirical investigation of the effect of different trade barriers on wages in Egypt. The effect of trade barriers on wage disparity has been widely discussed at both empirical and public policy levels. This debate has mainly dealt with traditional tariff barriers. Less attention has been attributed to other barriers, such as non-tariff measures and red tape costs. However, these barriers -- and in particular red tape costs --impede more than tariffs in developing countries. Thus, using a microeconomic dataset, this paper assesses to what extent different trade barriers affected wage disparities and employment in Egypt. These disparities are studied in three dimensions: on gender (males versus females), qualification (skilled versus unskilled), and regional (urban versus rural workers). The main findings show that red tape barriers have a higher impact than traditional tariffs on wage disparity. Female and blue-collar workers are more affected by such barriers. The effect of trade barriers on regional wage disparity seems to be less important then gender and qualification. Finally, when the effects of observable worker characteristics are filtered out, it turns out that wage premia are negatively affected by all trade barriers.