Food Prices, Wages, and Welfare in Rural India

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 w...

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Bibliographic Details
Main Author:	Jacoby, Hanan G.
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	ACCOUNTING AGRICULTURAL COMMODITIES AGRICULTURAL COMMODITY AGRICULTURAL COSTS AGRICULTURAL ECONOMICS AGRICULTURAL EXPORT AGRICULTURAL GOODS AGRICULTURAL INPUTS AGRICULTURAL MARKETS AGRICULTURAL PRICE AGRICULTURAL PRICES AGRICULTURAL PRODUCT AGRICULTURAL PRODUCTION AGRICULTURAL SECTOR AGRICULTURE AVERAGE PRICE AVERAGE PRICE CHANGE BASE YEAR COMMERCIAL POLICY COMMODITY PRICE COMMODITY PRICES CONSTANT RETURNS TO SCALE CONSUMER PRICES CONSUMERS CONSUMPTION EXPENDITURES COTTON CRISES CROP PRODUCTION CROPS DEMAND FUNCTION DEMOGRAPHIC DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOUNT RATE DISTRIBUTION OF INCOME DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE ECONOMETRICS ECONOMIC THEORY ELASTICITY ENGEL CURVE EQUAL SHARES EQUATIONS EQUILIBRIUM EXPECTED PRESENT VALUE EXPENDITURE EXPENDITURES EXPOSURE FAIR FAMILY LABOR FARM FARM PRODUCTIVITY FARM SECTOR FARM WORKERS FARMERS FARMLAND FARMS FOOD PRICE FOOD PRICES FOOD SECURITY FUTURE RESEARCH GENERAL EQUILIBRIUM GEOGRAPHICAL LABOR MOBILITY GLOBALIZATION GOVERNMENT INTERVENTIONS HOUSEHOLDS INCOME INCOME EFFECT INCOME EFFECTS INCOME ELASTICITY OF DEMAND INCOME GROUP INDUSTRIALIZATION INFLATION INNOVATION INNOVATIONS INPUT PRICES INSURANCE INTERNATIONAL MARKETS LABOR COSTS LABOR FORCE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LABOR MIGRATION LABOR PRODUCTIVITY LABORERS LOW-INCOME COUNTRIES MARGINAL PRODUCT MARGINAL VALUE MARKET ACCESS MARKET INTEGRATION MARKET PRICES MARKET SEGMENTATION MARKET WAGE MARKETING MILLS MINIMUM WAGE MOBILITY OF LABOR NOMINAL WAGES OUTPUT OUTPUTS PARTIAL EQUILIBRIUM ANALYSIS PER CAPITA INCOME POLITICAL ECONOMY PRICE CHANGE PRICE CHANGES PRICE ELASTICITY PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INFLATION PRICE MOVEMENT PRICE MOVEMENTS PRICE TRENDS PRODUCER PRICES PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY RETAIL RETAIL PRICES RICE PRICES RURAL AREAS SAFETY SAFETY NET SALES STORAGE CAPACITY SUBSTITUTION SUGAR SUPPLY OF SERVICES TARIFF RATES TRADE BARRIERS TRADE LIBERALIZATION TRADE POLICY UNEMPLOYMENT UNSKILLED LABOR VARIABLE INPUTS WAGE DETERMINATION WAGE GROWTH WAGE INCREASES WAGES WEALTH WHOLESALE MARKETS WHOLESALE PRICE WHOLESALE PRICES WTO
Online Access:	http://documents.worldbank.org/curated/en/2013/04/17594223/food-prices-wages-welfare-rural-india http://hdl.handle.net/10986/14451

Description
Summary:	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.

Food Prices, Wages, and Welfare in Rural India

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