Egypt's rural–urban income disparity: is the gap diverging?

Abstract

Although some studies have attempted to assess the rural–urban income gap in the 1960s and 1970s, no study has focused on the evolution of the gap over the past 25 years, let alone the evolution in the real differences in per capita income between the rural sector and the urban one. The objective of this study is to fill the gap in the literature on this topic and to appraise the development in the gap – in nominal and real terms – both on the aggregate per capita rural and urban income levels and in different expenditure size classes from 1981 till 2005, a period which witnessed a revolution in the agricultural policies from intensive government intervention to complete liberalization. The results of the study prove that the gap diverged again from 1994 to 2005 after converging from 1981 to 1994. The study also proves that the gap is more apparent in the middle classes rather than the lower ones. Finally, with respect to food consumption the study concluded that a slight gap may exist in favour of rural – and not urban – Egypt.

Are Rural Egyptians Better Off? Trends in Inequality and Real Consumption Expenditure in Rural Egypt

“…Large state intervention during that era entailed squeezing the agricultural surplus from the farmers to the state through determining the price of agricultural inputs (the state was, in most cases, their sole supplier), and buying the agricultural produce from farmers at below market prices. By reselling the produce at higher prices in the international market, the state aimed at acquiring a surplus necessary to finance industrialization (Abdelfadil, 1975, as cited in Helmy, ). Peasants were compelled to cultivate certain crops and deliver them to the state cooperatives at state‐determined prices.…”

“…During the 1980s and 1990s, many studies attempted to analyze the impact of various agricultural and food policies on income distribution and inequality (Adams, ; Adams & Ali, ; Alderman & von Braun, ; Bourguignon, ; Esfehani, ; Korayem, ; Mellor & Ramada, ; Yitzhaki, ; Zaytoun, ). Other studies focused on assessing the evolution of the urban–rural income gap rather than assessing rural consumption inequality (El‐Samman, ; Helmy, ; Korayem, ; Milanovic, as cited in Verme et al, ).…”