Sugar Prices, Labour Income and Poverty in Brazil

42 Pages Posted: 22 Feb 2006

See all articles by Marcelo Olarreaga

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Ekaterina Krivonos

United Nations Commission for Latin America and the Caribbean

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labour income and poverty in Brazil. We first estimate the extent of price transmission from world markets to eleven Brazilian States to capture the fact that some local markets may be relatively more isolated from changes in world prices. We then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, we measure the impact on household income of a 10% increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar producing regions experience larger wage increases. Employment opportunities are also larger in sugar producing regions. More interestingly, households at the top of the income distribution experience larger income gains due to higher wages, whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment.

Keywords: Trade, sugar, wages, Brazil

JEL Classification: F16, Q17

Suggested Citation

Olarreaga, Marcelo and Krivonos, Ekaterina, Sugar Prices, Labour Income and Poverty in Brazil (November 2005). CEPR Discussion Paper No. 5383. Available at SSRN: https://ssrn.com/abstract=886372

Marcelo Olarreaga (Contact Author)

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Ekaterina Krivonos

United Nations Commission for Latin America and the Caribbean ( email )

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