A Dynamic Econometric Model of Agricultural Wage Determination in Bangladesh

James K Boyce and Martin Ravallion

Oxford Bulletin of Economics and Statistics, 1991, vol. 53, issue 4, 361-76

Abstract: Econometric evidence on the evolution of real agricultural wages in Bangladesh over time has been used by some observers to argue that higher relative prices of food staples and higher agricultural productivity will help the rural poor. The authors re-examine this hypothesis using new data and a dynamic econometric model of wage determination. The model's specification avoids a number of shortcomings in past work, and the estimated equation gives a good yet parsimonious fit to annual data. Increases in rice prices relative to the prices of manufactured goods are found to have adverse effects on the real wages in terms of rice in both the short and long-run though there is full indexation relative to a bundle of goods in the long-run. On correcting for likely measurement errors in the official series, they find no evidence that changes in agricultural productivity have had a significant effect on real wage rates. Copyright 1991 by Blackwell Publishing Ltd

Date: 1991
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