The impact of genetically modified (GM) crops on the poor in developing countries is still the subject of controversy. While previous studies have examined direct productivity effects of Bacillus thuringiensis (Bt) cotton and other GM crops, little is known about wider socioeconomic outcomes. We use a microeconomic modelling approach and comprehensive survey data from India to analyse welfare and distribution effects in a typical village economy. Bt cotton adoption increases returns to labour, especially for hired female workers. Likewise, aggregate household incomes rise, including for poor and vulnerable farmers. Hence, Bt cotton contributes to poverty reduction and rural development
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