Revisiting the Impact of Trade Openness on Informal and Irregular Employment in Egypt

Salem, Mélika Ben; Zaki, Chahir

doi:2019.34.3.465

Journal of Economic Integration 2019 September;34(3) :465-497.
DOI: https://doi.org/10.11130/jei.2019.34.3.465

Revisiting the Impact of Trade Openness on Informal and Irregular Employment in Egypt

¹ERUDITE, Université Paris-Est Marne-la-Vallée and Paris School of Economics
²Cairo University, EMNES and ERF, Cairo, Egypt

Corresponding Author: Chahir Zaki ,Tel: +201222308036, Email: chahir.zaki@feps.edu.eg

ABSTRACT

This study examines the impact of trade openness on job quality, measured by the share of informal and irregular employment in total employment. By combining a microeconomic dataset (the Egyptian Labor Market Panel Survey) with macroeconomic variables (tariffs), we assess the effect of trade reforms on informal/irregular workers in Egypt. Our main findings show that there is a positive association between tariffs and both informal and irregular employments in Egypt. This effect is likely because the least productive informal firms will be forced to exit the industry and only the most productive (formal) firms will export to the international markets. This will increase the demand for formal (and eventually regular) workers that are usually more skilled and, in turn, lead to a likely decline in informal (and irregular) employment. While this effect on informality is robust, the one on irregularity is not.

JEL Classification

F10: General
F26:

Keywords: Irregular employment | informal employment | Egypt | trade reforms