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Calorie demand and labour productivity in Peru: evidence from the National Household Survey 1998 - 2002

Listed author(s):
  • Pablo Lavado


    (Consorcio de Investigación Económica y Social (CIES))

  • José Gallegos

Is the extreme poverty line a good measure of food insecurity and nutritional status? It is said that an individual who is above the extreme poverty line has enough resources to achieve a basic food basket. In Peru, extreme poverty has increased 7.5% between 1998 and 2002; however, daily calorie demand per capita have decreased 17.8% and the proportion of people who are not able to cover their caloric needs has increased from 22.3% to 36.3%. How could this happen? The reason for this is that families assign their budget in an irrational way substituting food for other goods or services. This has consequences not only in the nutritional status of individuals but also in their productivity. According to human capital theory [Becker (1962)], health is an input for productivity, so a poor nutritional status will transpire in a low productivity and finally in low wages. Between 1998 and 2002, wages per hour have decreased more than 30% in Lima Metropolitana only. In this context, a question rises: is there any relationship between household’s calorie availability (demand) and labour productivity in Peru, after controlling by income turn down (in other words, the raise of extreme poverty)? Although this topic has been treated widely by economic literature [Bliss y Stern (1978a y 1978b), Strauss (1986), among others], there is still no consensus about a systematic correlation between these variables. In order to attempt to answer this scenario in Peru, using the 2002 National Household Survey (ENAHO), we first estimate an extended Mincer equation using the two-step Heckman procedure to control for selection bias. We previously estimate the demand for calories in the individual’s household (using calorie availability as a proxy) with the aim to deal with the simultaneity relationship between this variable and wages. Using instrumental variables we also estimate the access to feeding assistance programs, such as community kitchens, in order to take into account their effect on daily calorie demand per capita. In order to analyze in depth household’s demand for calories and its effect on productivity we also apply quantile regressions. Finally, using a pool-data sample, we explore the period effect from 1998 until 2002 in order to take into account the economic turn down. Our main findings suggest that calorie demand has a positive and significant effect on wages, which means that for higher levels of calorie consumption correspond higher levels of productivity. Furthermore, we show that the education level of the household chief has also an important roll on the daily calorie demand determination, as well as household’s demographic characteristics. Regarding the access to feeding assistance programs, it is shown that programs with a higher level of focalization have a positive and significant impact on calorie demand, which represents an important finding as in terms of policy analysis.

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Paper provided by Departamento de Economía, Universidad del Pacífico in its series Working Papers with number 05-11.

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Length: 49 pages
Date of creation: Nov 2005
Date of revision: Nov 2005
Handle: RePEc:pai:wpaper:05-11
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