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Rising food prices and household welfare: Evidence from Brazil in 2008

  • Francisco H. G. Ferreira

    ()

    (World Bank)

  • Anna Fruttero

    ()

    (World Bank)

  • Phillippe Leite

    ()

    (World Bank)

  • Leonardo Lucchetti

    (University of Illinois at Urbana-Champaign)

Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was 5.3 percent. This paper uses spatially disaggregated monthly data on consumer prices and two different household surveys to estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage-earning agricultural labor force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. While the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, the market income effect was positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U-shaped, with the middle-income groups suffering larger proportional losses than the very poor. Nevertheless, since Brazil is 80 percent urban, higher food prices still led to a greater incidence and depth of poverty at the national level.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2011-200.pdf
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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 200.

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Length: 43 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2011-200
Contact details of provider: Web page: http://www.ecineq.org
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  1. Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010. "Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004," Journal of Development Economics, Elsevier, vol. 93(1), pages 20-36, September.
  2. Jed Friedman & James Levinsohn, 2001. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: "A Rapid Response Methodology"," William Davidson Institute Working Papers Series 387, William Davidson Institute at the University of Michigan.
  3. Fabio Veras Soares & Sergei Suarez Dillon Soares & Marcelo Medeiros & Rafael Guerreiro Osório, 2006. "Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty," Working Papers 21, International Policy Centre for Inclusive Growth.
  4. Anton Korinek & Johan Mistiaen & Martin Ravallion, 2006. "Survey nonresponse and the distribution of income," Journal of Economic Inequality, Springer, vol. 4(1), pages 33-55, April.
  5. Deaton, A., 1990. "Price Elasticities From Surveys Data: Extensions And Indonesian Results," Papers 69, World Bank - Living Standards Measurement.
  6. Ravallion, Martin & van de Walle, Dominique, 1991. "The impact on poverty of food pricing reforms: A welfare analysis for Indonesia," Journal of Policy Modeling, Elsevier, vol. 13(2), pages 281-299.
  7. 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.
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