Food Aid Delivery, Food Security and Aggregate Welfare in a Small Open Economy: Theory and Evidence
AbstractA small-open-economy model is developed to examine how the method of food aid disbursement affects labor employment, food security and aggregate welfare, in recipient countries, in an environment in which private sector firms pay efficiency wages to induce effort. Two forms of food aid delivery are considered: first is project food aid, under which food aid is used to finance infrastructure development and consumers are required to participate in public projects in order to receive food aid; the second is non-project food aid, which we use to capture all forms of food aid distributed to consumers free of charge. The model suggests that, when food aid is used to finance infrastructure development, it has no labor disincentive effects in the food industry, increases food security and decreases the level of unemployment in the recipient country. When food aid is distributed to consumers free of charge, however, the model predicts that it creates labor disincentive effects in the food industry, increases the unemployment level and decreases food security. Under both methods of distribution, the effect of food aid on aggregate welfare is ambiguous. Empirical results provide suggestive evidence for the hypothesis that project food aid increases food security while non-project food aid decreases food security.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 98-1.
Length: 52 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada
Phone: 613 782-8845
Fax: 613 782-8874
Web page: http://www.bank-banque-canada.ca/
Find related papers by JEL classification:
- J4 - Labor and Demographic Economics - - Particular Labor Markets
- Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bliss, Christopher & Stern, Nicholas, 1978. "Productivity, wages and nutrition : Part I: the theory," Journal of Development Economics, Elsevier, vol. 5(4), pages 331-362, December.
- Newey, Whitney K & West, Kenneth D, 1987.
"A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix,"
Econometric Society, vol. 55(3), pages 703-08, May.
- Whitney K. Newey & Kenneth D. West, 1986. "A Simple, Positive Semi-Definite, Heteroskedasticity and AutocorrelationConsistent Covariance Matrix," NBER Technical Working Papers 0055, National Bureau of Economic Research, Inc.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Swamy, Anand V., 1997. "A simple test of the nutrition-based efficiency wage model," Journal of Development Economics, Elsevier, vol. 53(1), pages 85-98, June.
- Esfahani, Hadi Salehi & Mookherjee, Dilip, 1995. "Productivity, contracting modes, and development," Journal of Development Economics, Elsevier, vol. 46(2), pages 203-231, April.
- Bulow, Jeremy I & Summers, Lawrence H, 1986.
"A Theory of Dual Labor Markets with Application to Industrial Policy,Discrimination, and Keynesian Unemployment,"
Journal of Labor Economics,
University of Chicago Press, vol. 4(3), pages 376-414, July.
- Jeremy I. Bulow & Lawrence H. Summers, 1986. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.