The impact of trade liberalization on manufacturing employment and wages in Egypt 1990-2007

Mona Said and Abeer Elshennawy

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the impact of trade liberalization on manufacturing employment and wages over a period 1993-2006, a period coinciding with significant reduction in trade barriers and rising unemployment. Despite increasing import penetration, the paper shows that employment has increased across all manufacturing industries. Data from Egypt’s labor market survey confirm that layoffs as a result of trade liberalization is not among the factors responsible for unemployment. On the other hand, regression analysis shows that the reduction in tariffs and increasing export orientation has been associated with an increase in wages in manufacturing industries though the role of export orientation in influencing poor wages has not been significant. Meanwhile, quantile regressions reveal that the impact of both the reduction in tariffs and increase in export orientation has not been uniform across the different quantiles of the wage distribution. The paper further points out to the possibility that further reduction of trade barriers might lead to high adjustment costs in terms of long spells of unemployment or lower pay on grounds of old age and low educational attainment of Egypt’s work force. Adjustment policies in the form of direct job search assistance as country experience illustrates is considered to be the most appropriate form of adjustment assistance.

Keywords: Trade liberalization; employment; wages; adjustment costs; adjustment assistance (search for similar items in EconPapers)
JEL-codes: F14 F16 J31 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ara, nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in International Research Journal of Finance and Economics 46 (2010): pp. 138-159

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:25759

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