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Dynamics of rice prices and agricultural wages in the Philippines

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  • Christine D. Lasco
  • Robert J. Myers
  • Richard H. Bernsten

Abstract

Rice trade liberalization in the Philippines should decrease domestic rice prices impacting both agricultural wages and the welfare of agricultural wage earners. This study examines the short-run and long-run relationship between rice prices and agricultural wages in the Philippines using a neoclassical wage determination model. Three empirical frameworks are used-a cointegration/error correction framework, which assumes nonstationary variables in long-run equilibrium, a first difference model that assumes nonstationary variables but no long-run equilibrium, and an OLS framework that assumes the model variables are stationary. Conclusions are reasonably robust across the three empirical frameworks with wages adjusting positively to rice price changes with a short-run elasticity of 0.29 to 0.57, and a long-run elasticity of 0.70 to 1.0 in preferred models. An analysis of welfare implications suggests that although households that are heavily reliant on agricultural wages for income will be adversely affected by rice price decreases, other households will benefit. Copyright (c)2008 International Association of Agricultural Economists.

Suggested Citation

  • Christine D. Lasco & Robert J. Myers & Richard H. Bernsten, 2008. "Dynamics of rice prices and agricultural wages in the Philippines," Agricultural Economics, International Association of Agricultural Economists, vol. 38(3), pages 339-348, May.
  • Handle: RePEc:bla:agecon:v:38:y:2008:i:3:p:339-348
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    References listed on IDEAS

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    1. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    2. Rashid, Shahidur, 2002. "Dynamics of agricultural wage and rice price in Bangladesh," MSSD discussion papers 44, International Food Policy Research Institute (IFPRI).
    3. Cororaton, Caesar B., 2004. "Rice Reforms and Poverty in the Philippines: A CGE Analysis," Discussion Papers DP 2004-14, Philippine Institute for Development Studies.
    4. David, Cristina C., 1997. "Agricultural policy and the WTO Agreement: The Philippine Case," Discussion Papers DP 1997-13, Philippine Institute for Development Studies.
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    Cited by:

    1. David Dawe, 2014. "Transmission of global food prices, supply response and impacts on the poor," Chapters,in: Handbook on Food, chapter 5, pages 100-121 Edward Elgar Publishing.
    2. Kym Anderson & Maros Ivanic & William J. Martin, 2014. "Food Price Spikes, Price Insulation, and Poverty," NBER Chapters,in: The Economics of Food Price Volatility, pages 311-339 National Bureau of Economic Research, Inc.
    3. Derek D. Headey, 2013. "The Impact of the Global Food Crisis on Self-Assessed Food Security," World Bank Economic Review, World Bank Group, vol. 27(1), pages 1-27.
    4. Dawe, David & Maltsoglou, Irini, 2014. "Marketing margins and the welfare analysis of food price shocks," Food Policy, Elsevier, vol. 46(C), pages 50-55.
    5. Lodovico Muratori & Susanne Fricke, 2017. "Spatial price transmission and trade policies: new evidence for agricultural products from selected sub-Saharan African countries with high frequency data," Jena Economic Research Papers 2017-006, Friedrich-Schiller-University Jena.
    6. Delphine Boutin, 2011. "D’une crise à l’autre : Mesurer l’impact des prix alimentaires sur la pauvreté," Larefi Working Papers 1106, Larefi, Université Bordeaux 4.
    7. Headey, Derek, 2011. "Was the Global Food Crisis Really a Crisis?: Simulations versus Self-Reporting," Research briefs 17, International Food Policy Research Institute (IFPRI).
    8. Jacoby, Hanan G., 2013. "Food prices, wages, and welfare in rural India," Policy Research Working Paper Series 6412, The World Bank.
    9. Jean-Christophe Bureau & Thorsten Rogall, 2017. "EU Policies and Global Food Security," LICOS Discussion Papers 39217, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. Ivanic, Maros & Martin, Will & Zaman, Hassan, 2012. "Estimating the Short-Run Poverty Impacts of the 2010–11 Surge in Food Prices," World Development, Elsevier, vol. 40(11), pages 2302-2317.
    11. Delphine Boutin, 2011. "D'une crise à l'autre : mesurer l'impact des prix alimentaires sur la pauvreté," Working Papers hal-00637608, HAL.
    12. Hanan G. Jacoby, 2016. "Food Prices, Wages, And Welfare In Rural India," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 159-176, January.
    13. Ivanic, Maros & Martin, Will, 2014. "Short- and long-run impacts of food price changes on poverty," Policy Research Working Paper Series 7011, The World Bank.
    14. Briones, Roehlano M., 2013. "Agriculture, Rural Employment, and Inclusive Growth," Discussion Papers DP 2013-39, Philippine Institute for Development Studies.
    15. repec:laf:wpaper:201106 is not listed on IDEAS
    16. Headey, Derek D. & Bachewe, Fantu Nisrane & Worku, Ibrahim & Dereje, Mekdim & Taffesse, Alemayehu Seyoum, 2012. "Urban wage behavior and food price inflation: the case of Ethiopia [Working Paper]:," ESSP working papers 41, International Food Policy Research Institute (IFPRI).

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