Policy Briefs
Trade Liberalization in Egypt: Let the Informal Labor Market Take the Strain
No.
11
Date
May, 2016
Topic
F1. Trade
In a nutshell
- Egypt should embark on trade liberalization as it currently has maintains relatively high tariff barriers.
- One barrier to further liberalization is the likely impact on jobs in a country where unemployment is already running at 13%.
- Egypt should take advantage of its large informal employment sector to reduce any transitional unemployment from liberalization.
- The main benefit of informality stems from its role as a shock absorber, providing employment to those that who cannot find jobs in the formal sector during difficult times.
- Egypt should delay moves to formalize its labor markets until after it has embarked on further trade liberalization to take advantage of its informal sector to cushion the impact on unemployment.
Research Fellows
Abeer Elshennawy
Professor of Economics, American University in Cairo