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Sugar Prices, Labor Income, and Poverty in Brazil

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  • Ekaterina Krivonos

    ()

  • Marcelo Olarreaga

    ()

Abstract

This paper assesses the impact of a potential liberalization of sugar regimes in OECD countries on household labor income and poverty in Brazil. Our results suggest that the largest increases in wages are to be experienced among workers in sugar-growing and sugar-processing sectors. Workers in other sectors experience modest wage gains, except low- and medium-educated workers in the service sector who see their wages decline. More surprisingly, after an increase in the price of an unskilled-labor-intensive good (sugar), skilled workers get the largest wage increase. However, the largest labor income gains are experienced by unskilled workers, mainly though movements out of unemployment. Our estimates show that approximately 280,000 individuals would move out of poverty following a hypothetical 10 percent increase in sugar prices. This finding highlights the importance of considering the employment channel when studying the poverty impacts of trade reforms.

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Bibliographic Info

Article provided by LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION in its journal JOURNAL OF LACEA ECONOMIA.

Volume (Year): (2009)
Issue (Month): ()
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Handle: RePEc:col:000425:008588

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Keywords: Trade; Sugar; Wages; Brazil;

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  1. Guilhoto, Joaquim José Martins & Barros, Alexandre L. Mendonça de & Marjotta-Maistro, Marta C. & Istake, Márcia, 2002. "Mechanization process of the sugar cane harvest and its direct and indirect impact over the employment in Brazil and in its 5 macro regions," MPRA Paper 38070, University Library of Munich, Germany.
  2. Porto, Guido G., 2005. "Informal export barriers and poverty," Journal of International Economics, Elsevier, vol. 66(2), pages 447-470, July.
  3. Krivonos, Ekaterina, 2005. "The impact of coffee market reforms on producer prices and price transmission," 2005 Annual meeting, July 24-27, Providence, RI 19315, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers 12228, Iowa State University, Department of Economics.
  5. Nicita, Alessandro, 2004. "Efficiency and equity of a marginal tax reform - income, quality, and price elasticities for Mexico," Policy Research Working Paper Series 3266, The World Bank.
  6. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
  7. Guido G. Porto, 2003. "Using survey data to assess the distributional effects of trade policy," Policy Research Working Paper Series 3137, The World Bank.
  8. John Baffes & Bruce Gardner, 2003. "The transmission of world commodity prices to domestic markets under policy reforms in developing countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(3), pages 159-180.
  9. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, vol. 6(3), pages 399-422, September.
  10. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
  11. Nina Pavcnik & Andreas Blom & Pinelopi Goldberg & Norbert Schady, 2004. "Trade Liberalization and Industry Wage Structure: Evidence from Brazil," World Bank Economic Review, World Bank Group, vol. 18(3), pages 319-344.
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Cited by:
  1. Chabe-Ferret, Sylvain & Gourdon, Julien & Marouani, Mohamed Ali & Voituriez, Tancrède, 2009. "Trade-Induced Changes in Economic Inequality: Assessment Issues and Policy Implications for Developing Countries," Economics Papers from University Paris Dauphine 123456789/4331, Paris Dauphine University.
  2. Alessandro Nicita & Marcelo Olarreaga & Guido Porto, 2012. "Pro-Poor Trade Policy in Sub-Saharan Africa," CEDLAS, Working Papers 0134, CEDLAS, Universidad Nacional de La Plata.
  3. Chisanga, Brian, 2012. "Efficiency and integration in the Zambian sugar market: analysing price transmission, price formation and policy," Research Theses 134483, Collaborative Masters Program in Agricultural and Applied Economics.
  4. Ole Boysen, 2009. "Border Price Shocks, Spatial Price Variation, and their Impacts on Poverty in Uganda," The Institute for International Integration Studies Discussion Paper Series iiisdp306, IIIS.
  5. Lucie Ménager & Christine Valente, 2011. "Market power and voluntary land redistribution," Working Papers hal-00867615, HAL.
  6. Azadi, Hossein & de Jong, Sanne & Derudder, Ben & De Maeyer, Philippe & Witlox, Frank, 2012. "Bitter sweet: How sustainable is bio-ethanol production in Brazil?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 3599-3603.

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