The impact of a large rice price increase on welfare and poverty in Bangladesh

Syed Hasan

ASARC Working Papers from The Australian National University, Australia South Asia Research Centre

Abstract: This paper studies the e ect of a sharp rice price increase on welfare and poverty in Bangladesh. We employ household expenditure information to estimate the welfare loss in- duced by the price increase. Our ndings suggest that we underestimate the proportionate welfare loss for the rice producing households and overestimate that of the households who do not produce rice, if we ignore indirect e ects arising from a change in household consump- tion and production behaviour. Our estimates further support the hypothesis of a quadratic relationship between welfare loss and permanent household income. We also demonstrate that higher rice prices either increase or decrease the poverty head-count ratio, depending on the choice of the poverty line. However, if we consider the per capita income gap as a measure of poverty, we always observe that higher rice prices unambiguously increase poverty.

Keywords: Welfare; Poverty; Rice Price Increase; Semiparametric Regression; Bangladesh (search for similar items in EconPapers)
JEL-codes: D12 I32 O13 O53 Q12 (search for similar items in EconPapers)
Pages: 34
Date: 2013
New Economics Papers: this item is included in nep-agr and nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:pas:asarcc:2013-11

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