Food Prices, Wages, and Welfare in Rural India

Jacoby, Hanan G.

PDF, English
Lizenz: Creative Commons LizenzvertragFood Prices, Wages, and Welfare in Rural India von Jacoby, Hanan G. underlies the terms of Creative Commons Attribution-ShareAlike 3.0 Germany

Download (655kB)
For citations of this document, please do not use the address displayed in the URL prompt of the browser. Instead, please cite with one of the following:


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.

Document type: Working paper
Place of Publication: Washington, D.C.
Date: 2013
Version: Secondary publication
Date Deposited: 12 July 2015
Number of Pages: 47
Faculties / Institutes: Miscellaneous > Individual person
DDC-classification: "Social services; association"
Controlled Subjects: Indien, Ländlicher Raum, Wohlstand, Lebensmittelpreis
Uncontrolled Keywords: Indien, Ländlicher Raum, Armut, Lebensmittelpreise / India, Rural Area, Poverty, Food Prices
Subject (classification): Sociology
Countries/Regions: India
Additional Information: © World Bank. License: CC BY 3.0 Unported
Related URLs: