Assessing Labor Income Inequality in Lebanon’s Private Sector

05 Jul 2017

The following study addresses income inequalities in the Private Sector. The paper examines labor income distribution in Lebanon using Personal Income Tax declarations by the private sector. Results show that private sector earnings are disproportionately distributed between income groups with the top 2 percent capturing a share of income almost as high as that of the bottom 60 percent. The calculated Gini coefficient places Lebanon at a rank of 129 from 141 countries in terms of income equality. Following a cross-country analysis and a literature review, broad medium term measures to help narrow the gap between income groups are proposed. An adequate regulatory environment to foster formal sector growth, provision and relevance of education, female labor participation, and policies that support employment in disadvantaged rural and urban districts, are recognized as key factors in the promotion of inclusive growth and income convergence. Short of the proposed measures, inequality in Lebanon is at risk of widening further over the long term with the introduction of the petroleum industry into the economy and the potential uneven spillover of its gains.