Sources of inequality in selected MENA countries

The paper deals with income inequality in the selected MENA countries focusing on the dynamics of domestic wage differentiations. The main aim is to identify the sources of inequalities. GDP per capita, share of manufacturing sector, urban share of population, gender participation in the labor force, education and openness may be possible factors. The paper analyzes pay inequalities using a panel regression model where the Theil index is used as the dependent variable. The results show that GDP per capita and female labor force participation have positive (increasing) effects, and openness has a negative (decreasing) effect on pay inequalities in these countries.

► We model the sources of manufacturing pay inequality in the selected MENA countries.
► Female labor force participation has inequality-increasing effect.
► Earning inequalities in favor of men may be a source of this effect.
► GDP per capita has inequality-increasing effect.
► This effect explains why the countries are on the increasing part of the inverse-U curve.
► Openness has inequality-decreasing effect on pay inequality measured by the Theil index.