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Rethinking the Redistribution Effects of Trade Liberalization in Egypt: A Microsimulation Analysis

Zaki, Chahir and Hendy, Rana (2009): Rethinking the Redistribution Effects of Trade Liberalization in Egypt: A Microsimulation Analysis.

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Abstract

This paper aims at evaluating the liberalization policies effects on inequality in Egypt with respect to gender, region and qualification level. No previous studies in Egypt, to our best knowledge, have used the Microsimulation analysis which is a good tool that allows such an evaluation and determines the redistribution aspects of macro policies. The latter consists of linking macroeconomic changes to the micro level of the economy i.e. the individual level. A Computable General Equilibrium model (CGE) is first estimated for a maximum tariff rate of 10%. And, wages and employment changes resulted from the CGE are replicated, in a second stage, into our micro data. Results show that liberalization policies have important impacts on inequalities among the Egyptian population in general. Inequality has decreased among males and females as well as among different regions of the Egyptian society but has increased among high-skilled and low-skilled workers. Results of the present research have important policy implications that have to be considered.

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