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Dynamics of rice prices and agricultural wages in the Philippines

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  • Christine D. Lasco
  • Robert J. Myers
  • Richard H. Bernsten

Abstract

Rice trade liberalization in the Philippines should decrease domestic rice prices impacting both agricultural wages and the welfare of agricultural wage earners. This study examines the short-run and long-run relationship between rice prices and agricultural wages in the Philippines using a neoclassical wage determination model. Three empirical frameworks are used-a cointegration/error correction framework, which assumes nonstationary variables in long-run equilibrium, a first difference model that assumes nonstationary variables but no long-run equilibrium, and an OLS framework that assumes the model variables are stationary. Conclusions are reasonably robust across the three empirical frameworks with wages adjusting positively to rice price changes with a short-run elasticity of 0.29 to 0.57, and a long-run elasticity of 0.70 to 1.0 in preferred models. An analysis of welfare implications suggests that although households that are heavily reliant on agricultural wages for income will be adversely affected by rice price decreases, other households will benefit. Copyright (c)2008 International Association of Agricultural Economists.

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Bibliographic Info

Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 38 (2008)
Issue (Month): 3 (05)
Pages: 339-348

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Handle: RePEc:bla:agecon:v:38:y:2008:i:3:p:339-348

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Cited by:
  1. Headey, Derek, 2011. "Was the global food crisis really a crisis?: Simulations versus self-reporting," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1087, International Food Policy Research Institute (IFPRI).
  2. Briones, Roehlano M., 2013. "Agriculture, Rural Employment, and Inclusive Growth," Discussion Papers, Philippine Institute for Development Studies DP 2013-39, Philippine Institute for Development Studies.
  3. Kym Anderson & Maros Ivanic & Will Martin, 2013. "Food Price Spikes, Price Insulation and Poverty," NBER Working Papers 19530, National Bureau of Economic Research, Inc.
  4. Derek D. Headey, 2013. "The Impact of the Global Food Crisis on Self-Assessed Food Security," World Bank Economic Review, World Bank Group, World Bank Group, vol. 27(1), pages 1-27.
  5. Headey, Derek D. & Bachewe, Fantu Nisrane & Worku, Ibrahim & Dereje, Mekdim & Taffesse, Alemayehu Seyoum, 2012. "Urban wage behavior and food price inflation: the case of Ethiopia [Working Paper]:," ESSP working papers, International Food Policy Research Institute (IFPRI) 41, International Food Policy Research Institute (IFPRI).
  6. Ivanic, Maros & Martin, Will & Zaman, Hassan, 2012. "Estimating the Short-Run Poverty Impacts of the 2010–11 Surge in Food Prices," World Development, Elsevier, Elsevier, vol. 40(11), pages 2302-2317.
  7. Delphine Boutin, 2011. "D’une crise à l’autre : Mesurer l’impact des prix alimentaires sur la pauvreté," Larefi Working Papers, Larefi, Université Bordeaux 4 1106, Larefi, Université Bordeaux 4.
  8. repec:laf:wpaper:201106 is not listed on IDEAS
  9. Jacoby, Hanan G., 2013. "Food prices, wages, and welfare in rural India," Policy Research Working Paper Series 6412, The World Bank.
  10. Ivanic, Maros & Martin, Will, 2014. "Short- and long-run impacts of food price changes on poverty," Policy Research Working Paper Series 7011, The World Bank.
  11. Delphine Boutin, 2011. "D'une crise à l'autre : mesurer l'impact des prix alimentaires sur la pauvreté," Working Papers hal-00637608, HAL.
  12. Dawe, David & Maltsoglou, Irini, 2014. "Marketing margins and the welfare analysis of food price shocks," Food Policy, Elsevier, Elsevier, vol. 46(C), pages 50-55.

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