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Rural Welfare Effects of Food Price Changes under Induced Wage Responses: Theory and Evidence for Bangladesh

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Ravallion, Martin

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Abstract

Welfare distributional effects in a food producing economy of changes in the relative price of food are analyzed, allowing for labor market responses. Conditions for signing the welfare effects are derived for a stylized agricultural household and are tested for Bangladesh. Point estimates suggest that wage responses are unlikely to be strong enough to reject the partial equilibrium view that higher food prices have adverse distributional effects in the short run. Long-run welfare effects do appear to be more favorable to the poor, though it takes three or four years before the rual poor start to gain from a food price increase. Copyright 1990 by Royal Economic Society.

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Publisher Info
Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 42 (1990)
Issue (Month): 3 (July)
Pages: 574-85
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Handle: RePEc:oup:oxecpp:v:42:y:1990:i:3:p:574-85

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  1. Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank. [Downloadable!]
  2. Datt, Gaurav & Ravallion, Martin, 1998. "Farm productivity and rural poverty in India," FCND discussion papers 42, International Food Policy Research Institute (IFPRI). [Downloadable!]
  3. Narayanan, Sudha & Gulati, Ashok, 2002. "Globalization and the smallholders," MSSD discussion papers 50, International Food Policy Research Institute (IFPRI). [Downloadable!]
  4. Narayanan, Sudha & Gulati, Ashok, 2002. "Globalization and the smallholders," MTID discussion papers 50, International Food Policy Research Institute (IFPRI). [Downloadable!]
  5. Thomas W. Hertel, 2006. "A Survey of Findings on the Poverty Impacts of Agricultural Trade Liberalization," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 3(1), pages 1-26. [Downloadable!]
  6. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 14(4), pages 377-405, December. [Downloadable!] (restricted)
    Other versions:
  7. Charles Ackah, & Simon Appleton, . "Food Price Changes and Consumer Welfare in Ghana in the 1990s," Discussion Papers 07/03, University of Nottingham, CREDIT. [Downloadable!]
  8. Chen, Shaohua & Ravallion, Martin, 2003. "Household welfare impacts of China's accession to the World Trade Organization," Policy Research Working Paper Series 3040, The World Bank. [Downloadable!]
  9. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank. [Downloadable!]
  10. Porto, Guido G., 2005. "Estimating household responses to trade reforms : net consumers and net producers in rural Mexico," Policy Research Working Paper Series 3695, The World Bank. [Downloadable!]
  11. Wodon, Quentin & Zaman, Hassan, 2008. "Rising food prices in Sub-Saharan Africa : poverty impact and policy responses," Policy Research Working Paper Series 4738, The World Bank. [Downloadable!]
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