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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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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. Nicita, Alessandro, 2004. "Efficiency and equity of a marginal tax reform - income, quality, and price elasticities for Mexico," Policy Research Working Paper Series, The World Bank 3266, The World Bank.
  2. 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, Taylor & Francis Journals, vol. 6(3), pages 159-180.
  3. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series, The World Bank 3265, The World Bank.
  4. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series, The World Bank 3358, The World Bank.
  5. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series, The World Bank 3222, The World Bank.
  6. 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.
  7. Guido G. Porto, 2003. "Using survey data to assess the distributional effects of trade policy," Policy Research Working Paper Series, The World Bank 3137, The World Bank.
  8. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers, Iowa State University, Department of Economics 12228, Iowa State University, Department of Economics.
  9. Porto, Guido G., 2005. "Informal export barriers and poverty," Journal of International Economics, Elsevier, Elsevier, vol. 66(2), pages 447-470, July.
  10. 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, World Bank Group, vol. 18(3), pages 319-344.
  11. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, World Bank Group, vol. 6(3), pages 399-422, September.
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Cited by:
  1. Sylvain Chabe-Ferret & Julien Gourdon & Mohamed Ali Marouani & Tancrède Voituriez, 2007. "Trade-Induced Changes in Economic Inequality: Assessment Issues and Policy Implications for Developing Countries," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2007/11, DIAL (Développement, Institutions et Mondialisation).
  2. Chisanga, Brian, 2012. "Efficiency and integration in the Zambian sugar market: analysing price transmission, price formation and policy," Research Theses, Collaborative Masters Program in Agricultural and Applied Economics 134483, Collaborative Masters Program in Agricultural and Applied Economics.
  3. Alessandro Nicita & Marcelo Olarreaga & Guido Porto, 2012. "Pro-Poor Trade Policy in Sub-Saharan Africa," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0134, CEDLAS, Universidad Nacional de La Plata.
  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, IIIS iiisdp306, IIIS.
  5. 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, Elsevier, vol. 16(6), pages 3599-3603.
  6. Lucie Ménager & Christine Valente, 2011. "Market power and voluntary land redistribution," Working Papers, HAL hal-00867615, HAL.

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