Do Egyptian Trade Unions Have Any Bargaining Power?

I contribute to the study of wage determination in the MENA region by studying the union wage gap in Egypt, a country where union activity has been highly controlled and centralized since independence. Despite reports of a dysfunctional union landscape, our findings point to a positive and significant union wage gap, comprised between 0.05 and 0.2 log-wages and robust to several alternative specifications. The data does not allow us to reject the null hypothesis of an identical gap between the public and private sectors, and shows positive wage gaps across educational levels, firm sizes and economic activities. Given the centralized and regime-controlled character of labor’s organization in Egypt as documented by the broader social sciences, this finding comes as a surprise. Investigating other frequent outcomes of union activity in the second part of the paper, I find no links neither between unionization and compressed wage distributions at the sectoral level, nor between unionization levels and decreasing profits at the firm level. The positive union wage gap is thus unlikely to stem from traditional union activity per se, and suggests careful interpretation of union wage gaps in settings where labor organization is restricted.