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Urban Wage Behaviour and Food Price Inflation in Ethiopia

Year: 2016

Type: article

Abstract: Theoretically, increases in food prices could benefit the poor by increasing the demand for unskilled labour, and hence their wages. This paper tests this hypothesis in urban Ethiopia. We exploit a unique panel of monthly price and wage data from 111 urban markets to first construct welfare-relevant measures of real wages, before employing various panel estimators to formally test wage-food price integration. We find moderate rates of long-run adjustment to increases in food prices, but that adjustment is very slow. This implies highly adverse short-run welfare impacts of higher food prices on the urban poor.

Source: The Journal of Development Studies

DOI: 10.1080/00220388.2016.1219343

Authors: Fantu Bachewe, Derek Headey

Institution: International Food Policy Research Institute

Language: English

Topic: Economics of Agriculture and Food Markets

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities, Zero hunger

Open Access status: green

Funders: World Bank Group, Pusat Pengurusan Penyelidikan dan Instrumentasi