Food Prices, Wages, and Welfare in Rural India
By Hanan G. Jacoby. 2013
121 citations recorded by the source corpus.
This paper considers the welfare and distributional consequences of higher relative food prices in rural India through the lens of a specific-factors, general equilibrium, trade model applied at the district level. The evidence shows that nominal wages for manual labor both within and outside agriculture respond elastically to increases in producer prices; that is, wages rose faster in rural districts growing more of those crops with large price run-ups over 2004-09. Accounting for such wage gains, the analysis finds that rural households across the income spectrum benefit from higher agricultural commodity prices. Indeed, rural wage adjustment appears to play a much greater role in protecting the welfare of the poor than the Public Distribution System, India's giant food-rationing scheme. Moreover, policies, like agricultural export bans, which insulate producers (as well as consumers) from international price increases, are particularly harmful to the poor of rural India. Conventional welfare analyses that assume fixed wages and focus on households' net sales position lead to radically different conclusions.
Subfields: Economics and Econometrics, Sociology and Political Science, Soil Science
View Paper: https://www.semanticscholar.org/paper/ef4378d3787de238ae63851c4ba9c567d8878a5e
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Citations in the corpus
- Food Price Volatility and Its Implications for Food Security and Policy (2016, methodology): “This implies that the ability to adjust output and transfer labor between agriculture and other sectors has a much smaller impact than the impact of wage changes emphasized by Jacoby (2013). In the longer-run scenario, in which all factors are mobile, the importance of adjustment responses increases”
- The impacts of food price and income shocks on household food security and economic well-being: Evidence from rural Bangladesh (2014, unknown): “farming or non-farming households, landowners or non-landowners) are helped or hurt depends on the rapidity and magnitude at which labor and commodity markets, both inside and outside agriculture, adjust in response to price shocks (Sah and Stiglitz, 1987; Jacoby, 2013).”
- Trade Liberalization and Poverty: What Have We Learned in a Decade? (2014, background): “Jacoby (2013), accounting for such wage responses in India, finds that rural households across the entire income distribution gain from higher food prices.”