International Trade and Labor Markets : Evidence from the Arab Republic of Egypt
Since the early 1990s, some developing countries have experienced a coincidence of rising exports—especially those related to global value chains—and improved labor market outcomes. During 2000–10, rising trade was associated with falling poverty...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/154431621606334137/International-Trade-and-Labor-Markets-Evidence-from-the-Arab-Republic-of-Egypt http://hdl.handle.net/10986/35629 |
| Summary: | Since the early 1990s, some developing
countries have experienced a coincidence of rising
exports—especially those related to global value chains—and
improved labor market outcomes. During 2000–10, rising
trade was associated with falling poverty and inequality in
many developing countries. However, the Arab Republic of
Egypt was not one of these countries, although it signed
several trade agreements. The lack of trade-related
improvements in labor market outcomes—including poverty,
inequality, average wage levels, informality, and female
labor force participation—could be explained by at least two
possibilities. First, it is possible that trade agreements
did not produce the same increase in trade for Egypt as for
other countries. Second, it is possible that exports do not
generate the same kinds of changes in labor market outcomes
as experienced in other countries. After presenting the
trends in key labor market outcomes over 2000–19, this paper
evaluates both hypotheses. Using a gravity model approach,
the results suggest that the changes in Egypt’s exports
following trade agreements are above internationally
estimated averages. Second, the results from a Bartik
approach find no significant relationship between rising
exports and wages, informality, or female labor force
participation. Additional analysis shows that Egypt’s
average wage levels are among the highest among countries
that export the same goods exported by Egypt, possibly
suggesting that Egypt has a relatively weak comparative
advantage in currently exported goods, and thus might need
to rethink its export basket. |
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