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Sugar prices, labor income, and poverty in Brazil

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  • Krivonos, Ekaterina
  • Olarreaga, Marcelo

Abstract

This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labor income and poverty in Brazil. The authors first estimate the extent of price transmission from world markets to 11 Brazilian states to capture the fact that some local markets may be relatively more isolated from changes in world prices. They then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, they measure the impact on household income of a 10 percent increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar-producing regions have better employment opportunities and experience larger wage increases. More interestingly, households at the top of the income distribution experience larger income gains due to higher wages, whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment.

Suggested Citation

  • Krivonos, Ekaterina & Olarreaga, Marcelo, 2006. "Sugar prices, labor income, and poverty in Brazil," Policy Research Working Paper Series 3874, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3874
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    References listed on IDEAS

    as
    1. M. Ataman Aksoy & John C. Beghin, 2005. "Global Agricultural Trade and Developing Countries," World Bank Publications - Books, The World Bank Group, number 7464, December.
    2. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series 3358, The World Bank.
    3. 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.
    4. Porto, Guido G., 2005. "Informal export barriers and poverty," Journal of International Economics, Elsevier, vol. 66(2), pages 447-470, July.
    5. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
    6. Porto, Guido G., 2006. "Using survey data to assess the distributional effects of trade policy," Journal of International Economics, Elsevier, vol. 70(1), pages 140-160, September.
    7. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," The World Bank Economic Review, World Bank, vol. 6(3), pages 399-422, September.
    8. Nina Pavcnik & Andreas Blom & Pinelopi Goldberg & Norbert Schady, 2004. "Trade Liberalization and Industry Wage Structure: Evidence from Brazil," The World Bank Economic Review, World Bank, vol. 18(3), pages 319-344.
    9. 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.
    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. 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.
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    Citations

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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 DT/2007/11, DIAL (Développement, Institutions et Mondialisation).
    2. Brambilla, Irene & Porto, Guido, 2016. "Trade, Poverty Eradication, and the Sustainable Development Goals," ADBI Working Papers 629, Asian Development Bank Institute.
    3. Nicita, Alessandro & Olarreaga, Marcelo & Porto, Guido, 2014. "Pro-poor trade policy in Sub-Saharan Africa," Journal of International Economics, Elsevier, vol. 92(2), pages 252-265.
    4. Lucie Ménager & Christine Valente, 2011. "Market power and voluntary land redistribution," Working Papers hal-00867615, HAL.
    5. 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.
    6. Marie-Gabrielle Piketty & Tatiane de Menezes & João Bernardo Neto Aurélio Duarte, 2008. "Sugar cane in Brazil, poverty and equity: evidences for the 1992-2006 period," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211634520, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. Oh, Saera & Lee, Sang Hyeon, 2017. "Does trade contribute to poverty reduction? If it does, where the benefit goes to?," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252849, Southern Agricultural Economics Association.
    8. repec:dau:papers:123456789/4331 is not listed on IDEAS
    9. 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.
    10. 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.

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    More about this item

    Keywords

    Markets and Market Access; Economic Theory&Research; Agribusiness&Markets; Agricultural Trade; Agricultural Industry;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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