significant– is double the size than the effect for the entire economy, and close to zero for workers in the services industries. Interestingly, we do not find an important effect on low-skill workers, the main type of worker in labor-intensive industries.

Despite rising wages for women in Egypt –until recently–imports seem to negatively impact them, and statistical significance increases as years pass. In previous studies, Artuç, Lee, and Bastos (2019) and Robertson et al. (2020) found that better-off groups –older and highly skilled– had the largest wage gains from trade. We do not find evidence of the latter in the case of Egypt.

**_How did an increase in imports affect the informality rate in Egypt_ ?** Egypt's informal rates have been relatively stubborn, with an upward trend since 2009. Consistent with this, we do not find any improvement in informality rates after a trade shock in the EU and US export supply. On the contrary, between 2009 and 2012, there was a small and statistically significant positive effect on the informality rate of all workers – which then completely dissipated in magnitude and significance (Table 3).

The positive effect seems to be guided by young workers, as they are the only group that experiences a positive, statistically significant impact in the same period. The latter is possibly related to Egypt's historically high youth unemployment rate, above 25% or 30% for some years between 2009 and 207 (World Bank 2022). A $100 increase in imports from 2009 to 2010 is related to an increase of 0.001 percentage point in the informality rate for workers between 15 and 35 years old (Table 3). However, the effect dissipates in the long term. Although coefficients are not statistically significant for high-skilled workers, they are the only group of workers that show a negative relationship between their informality rates and increasing imports.

**_How did an increase in imports affect Egypt's FLFP rate?_** The evolution of FLFP in Egypt is not encouraging. It has not surpassed the 24 percent threshold for the past two decades. Moreover, imports do not seem to be helping more women enter the labor market. In fact, similar to the literature that finds adverse effects on female labor participation, Kizm and markaz that are more exposed to trade saw a negative effect on their FLFPR after a $100 increase in imports per worker (Table 4). Further, our results suggest that women older than 35 years old are the most affected. In the long run, the negative effects seem to grow in magnitude but decline in statistical significance.

# **5. Discussion of Results: A Weak Relationship between Trade and Labor Markets**

Egypt’s liberalization policy seems to have marginal effects on the volume of imports and not encouraging effects on the local labor markets when analyzing imports’ effects. Gravity model estimates suggest that the average increase in trade from signing new trade agreements is 5.8%, much less than the literature has found. Specifically for imports, we do not find a statistically significant effect of signing an additional RTA, plausibly due to the historically long trade deficit and the Egyptian trend to import most of its intermediate goods for production. A trade liberalization agenda could potentially increase Egyptian exports, however.

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