Inequality of opportunity and outcomes in the Arab Region

By Eman El-Hadary (Economic Research Forum)  and Rana Hendy (Economic Research Forum)

Rana Hendy, ERF

Rana Hendy, ERF

Despite the long negligence of inequality research for the benefit of economic growth, rising attention is paid to inequality and its possible contribution to the uprisings in the region. However, it is important to highlight that the Arab Region is characterized by predominant data scarcity for decades. Data are either unavailable or inaccessible by the research community due to political constraints. Nevertheless, the Economic Research Forum (ERF) is currently carrying out an important initiative through its partnership with statistical offices around the region making micro data accessible to the public by collecting, harmonizing and documenting the data. Building on these efforts, ERF has recently launched the Open Access Micro Data Initiative (OAMDI) that consists of dissemination micro data. This initiative has already started to bear its fruits as 17 datasets from three Arab countries namely Egypt, Palestine and Jordan are now accessible via the new ERF data portal.

In his talk, Francois Bourguignon, Paris School of Economics has confirmed repeatedly that one should not make a generalized statement about rising inequality since evidence showed declining trends for some developed and developing countries. Comparing the different regions across the globe, Asia has increasing inequality trends as oppose to Latin America and countries in transitions that have experienced rising inequality followed by declining trends. No significant change in the MENA region over time. As for the case of Africa, unavailability of data hindered the chance of performing proper dynamic analysis. Bourguignon has also added that researchers need to focus not only on the general inequality but also dig more into the reasons why.

Bringing the region into scope, Mustapha Nabli, Former Governor of Central Bank of Tunisia discussed the research studies produced by ERF measuring inequality of outcomes versus inequality of opportunity. The main message that came out very clearly is that the findings about income inequality (Gini coefficients) are country-specific. The same conclusion goes for education and health inequalities. Answering the question about “what do we need to know more about on measuring and characterizing inequality?”, Nabli added that there is no inequality measures using incomes in the region. In addition to that, data falls behind answering questions regarding top incomes and access to job opportunities.

Rana Hendy, Economic Research Forum , on the other hand, presented research findings of a research paper on “Assessing the Effects of Trade Liberalization on Wage Inequalities in Egypt: A Micro Simulation Analysis”. The paper used a micro simulation model to assess the impact of partial trade liberalization (tariff reduction by 50 percent) on the wages of the different labor segments in Egypt. The study concluded that Egypt has a comparative advantage in sectors that are highly intensive in unskilled workers. In order to exploit this advantage, the Government of Egypt should consider liberalizing and developing these specific sectors in order to generate new employment opportunities and reduce unemployment among them. These policies should also ensure providing technical training to the workers to increase their productivity in order to better face the fierce competition once the economy is more exposed to the rest of the world. As for females, since they are working in sectors characterized by a comparative advantage, liberalizing these sectors is likely to foster females’ employment, being a crucial priority for economic development.


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