The Distributional Effects of Oil Price Changes on Household Income: Evidence from Mali

Kangni Kpodar and Calvin Djiofack

Journal of African Economies, 2010, vol. 19, issue 2, 205-236

Abstract: Many net oil-importing developing countries, particularly African economies, have faced economic difficulties with high oil price increases. As a case study, this paper assesses the distributional effects of a rise in various petroleum product prices in Mali using a standard computable general equilibrium model. The results suggest that rising diesel prices primarily affect richer households, while the poorest ones tend to suffer more from higher kerosene and gasoline prices. Overall, the impact of fuel prices on household budgets shows a U-shaped relationship with expenditure per capita. Regardless of the oil product considered, high-income households benefit disproportionately from oil price subsidies. This suggests that petroleum price subsidies are ineffective in protecting the income of poor households compared with a targeted subsidy. Copyright 2010 The author 2009. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2010
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Related works:
Working Paper: Impact de l'accroissement du prix des produits pétroliers sur la distribution des revenus au Mali (2011)
Working Paper: Impact de l’accroissement du prix des produits pétroliers sur la distribution des revenus au Mali (2007)
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