Wealth inequality and inter-governorate migration: Evidence from Egypt

-Progress in Development Studies

Although economic growth constitutes a necessary condition to reduce poverty, economists agree that its efficiency in terms of poverty reduction largely depends on the level of wealth inequality. Nowadays, most countries pursue a pro-poor growth policy that not only promotes economic growth but also reduces wealth inequality (Bhagwati, 1988; Goudie and Ladd, 1999; Kakwani and Ernesto, 2000; Perkins et al., 2001). Whilst migration is understood to be significant in how economic growth impacts on wealth inequality in different place, the links between changing spatial patterns of wealth inequality and migration are not yet fully understood.

In conventional theory, individuals relocate to maximize utility, given spatial variation in wage and price levels (Molloy et al., 2011; Valencia, 2008). There are several recent studies showing that community characteristics of home and destination locations are also important factors exerting ‘push’ and ‘pull’ forces on migrants (Ackah and Medvedev 2012; Mayda, 2007; Kim and Cohen, 2010).  Human capital plays a key role in economic development. Therefore, understanding whether welfare levels can attract migrants, especially highly educated and skilled migrants, is important for economic development.

The main objective of this study is to examine the push and pull effects of economic levels and wealth inequality levels on inter-governorate migration using a gravity model and data from the Population and Housing Censuses of Egypt in 1996 and 2006. We provide a descriptive analysis of inter-governorate migration in Egypt and then examine whether the mean and inequality of the origin and destination governorates can affect inter-governorate migration.

Egypt offers an interesting case to look at for three reasons.

Firstly, Egypt is the most populous country in the Arab world. It is a lower middle-income country with a per capita Gross Domestic Product (GDP) of around US$3,300 in 2013 (World Bank, 2014).

Secondly, Egypt has achieved an annual economic growth rate of around 5 percent, but has not been very successful in poverty reduction. Poverty in Egypt is persistent, with the rate around 20 percent during the last two decades (El-Laithy, 2011). 75 percent of the poor live in rural areas (World Bank, 2014) and there is high wealth inequality between as well as within regions.

Thirdly, although there are several studies on migration in Egypt (such as Zohry (2009), Herrera and Badr (2012), Wahba (2015), and Arouri and Nguyen (2018)), there are no studies on the links between migration and wealth inequality in Egypt.

So, for all these reasons, it is important to investigate whether wealth inequality and economic levels are pull or push factors for migration among governorates in Egypt.

-Wealth inequality and inter-governorate migration: Evidence from Egypt, Progress in Development Studies.