ABSTRACT
Although it is now well accepted that growth constitutes the most important channel through which poverty can be affected, the relationship between trade and growth remains empirically elusive, leaving little hope that a direct link between trade and poverty can be further established. 1 A more fruitful approach to studying the impact of macroeconomic and trade policy changes on poverty is therefore to examine their differential effect on labor market rewards of various income categories in the earning distribution, particularly those classified as low-waged or poor. This chapter investigates the effect of trade reform on the incomes of low-waged and poor workers in Egypt over the period of rapid trade liberalization between 1998 and 2006. The availability of trade openness and protection measures at the two-digit industry levels, together with a rich panel of labor market data, allows us to accomplish this task for the manufacturing sector in Egypt.
