Wage Differentials During Economic Reform and Crisis: Evidence from Egypt and Jordan

This paper examines public-private, gender and education dynamics of wage inequality in Egypt and Jordan during a period of economic liberalisation and crises (1989-2009). The results point to two distinct phases in Egypt: an initial one of wage erosion and narrowing pay differentials, and a subsequent phase of recovery of real wages and decompression of the wage structure. Estimates based on data after the onset of the global financial crisis in both countries point to a combination of real pay erosion again, but this time coupled with widening sector pay gaps. High returns to university education for women helped maintain a compressed gender wage differential in Jordan in comparison with Egypt. The paper concludes by drawing implications for inclusionary labour market reforms as Middle East and North African countries recover from the crisis.