On Trade Policies and Wage Disparity in Egypt: Evidence from 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 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, are more impeding than tariffs in developing countries. Thus, using a microeconomic dataset, an assessment to what extent different trade barriers affected wage disparity and employment in Egypt will be made. This disparity is studied in three dimensions: on gender (males vs. females), qualification (blue vs. white collar) and regional (urban vs. rural workers). The main findings show that both non-tariff measures and red tape barriers have a higher impact than traditional tariffs on wage disparity. Females, urban workers and blue-collar workers are more affected by such barriers. Finally, when the effects of observable worker characteristics are filtered out, the results are that wage premia are negatively affected by all trade barriers.