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Sugar Prices, Labour Income and Poverty in Brazil

  • Krivonos, Ekaterina
  • Olarreaga, Marcelo

This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labour income and poverty in Brazil. We first estimate the extent of price transmission from world markets to eleven Brazilian States to capture the fact that some local markets may be relatively more isolated from changes in world prices. We then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, we measure the impact on household income of a 10% increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar producing regions experience larger wage increases. Employment opportunities are also larger in sugar producing regions. 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5383.

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Date of creation: Nov 2005
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Handle: RePEc:cpr:ceprdp:5383
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  1. 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.
  2. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers 12228, Iowa State University, Department of Economics.
  3. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series 3358, The World Bank.
  4. 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.
  5. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
  6. Porto, Guido G., 2005. "Informal export barriers and poverty," Journal of International Economics, Elsevier, vol. 66(2), pages 447-470, July.
  7. Guido G. Porto, 2003. "Using survey data to assess the distributional effects of trade policy," Policy Research Working Paper Series 3137, The World Bank.
  8. 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.
  9. 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.
  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, 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, vol. 6(3), pages 399-422, September.
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