AJAE Appendix: Agro-Manufactured Export Prices, Wages and Unemployment

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Estimating household responses to trade reforms : net consumers and net producers in rural Mexico

This paper explores an empirical methodology to assess the impacts of trade reforms on household behavior in developing countries. It focuses on consumption and income responses: when price reforms take place, households modify consumption and production decisions and local labor markets adjust. The paper proposes a joint estimator of demand and wage price elasticities from survey data. The method uses an empirical model of demand to extract price information from unit values, and uses this information to estimate the response of households to price reforms. By correcting unit values for quality effects and measurement error, the method overcomes the problem of the endogeneity of unit values. By endogeneizing household income, the model corrects potential biases in the estimation of own- and cross-price elasticities in consumption. The paper applies the method to an expenditure and income survey for rural Mexico. It shows that the corrections suggested in this paper are empirically important. In particular, it shows that allowing for consumption and income responses is a key element of an accurate empirical assessment of trade policy.Environmental Economics&Policies,Economic Theory&Research,Access to Markets,Markets and Market Access,Inequality

Trade reforms, market access, and poverty in Argentina

Much of the literature that studies the relationship between trade and poverty in developing countries focuses on the effects of national trade reforms, such as own tariff reductions. In contrast, the World Trade Organization negotiations at the Doha Round were more concerned with the poverty effects on low-income countries, and of foreign reforms, such as the elimination of agricultural subsidies in industrial economies. The author empirically compares the relative poverty impacts of national and foreign trade reforms in Argentina. The author investigates national trade reforms, including tariff cuts on consumption goods and capital goods in Argentina. Foreign trade reforms include the elimination, in industrial countries, of agricultural subsidies and trade barriers on agricultural manufactures and industrial manufactures. Thesepolicies enhance the market access of Argentine exports. Overall, a combination of own reforms and enhanced market access would cause poverty to decline by between 1.7 and 4.6 percentage points. This evidence suggests that trade policies can be important poverty-reducing instruments in Argentina.Economic Theory&Research,Environmental Economics&Policies,Health Economics&Finance,Labor Policies,Payment Systems&Infrastructure,Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Health Economics&Finance,Markets and Market Access

Farm productivity and marketstructure : evidence from cotton reforms in Zambia

This paper investigates the impacts of cotton marketing reforms on farm productivity, a key element for poverty alleviation, in rural Zambia. The reforms comprised the elimination of the Zambian cotton marketing board that was in place since 1977. Following liberalization, the sector adopted an outgrower scheme, whereby firms provided extension services to farmers and sold inputs on loans that were repaid at the time of harvest. There are two distinctive phases of the reforms: a failure of the outgrower scheme, and a subsequent period of success of the scheme. The authors'findings indicate that the reforms led to interesting dynamics in cotton farming. During the phase of failure, farmers were pushed back into subsistence and productivity in cotton declined. With the improvement of the outgrower scheme of later years, farmers devoted larger shares of land to cash crops, and farm productivity significantly increased.Crops&Crop Management Systems,Economic Theory&Research,Livestock&Animal Husbandry,Rural Poverty Reduction,Rural Development Knowledge&Information Systems

Trends in tariff reforms and trends in wage inequality

The authors provide new evidence on the impacts of trade reforms on wages and wage inequality in developing countries. While most of the current literature on the topic achieves identification by comparing outcomes before and after one episode of trade liberalization across industries, they propose a stronger identifying strategy. The authors explore the recent historical record of policy changes adopted by Argentina: from significant protection in the early 1970s, to the first episode of liberalization during the late 1970s, back to a slowdown of reforms during the 1980s, to the second episode of liberalization in the 1990s. These swings in trade policy comprise broken trends in trade reforms that they can compare with observed trends in wages and wage inequality. After setting up unusual historical data sets of trends in tariffs, trends in wages, and trends in wage inequality, the evidence supports two well-known hypotheses: trade liberalization, other things being equal, (1) has reduced wages, and (2) has increased wage inequality.Free Trade,Economic Theory&Research,Trade Policy,Export Competitiveness,Labor Markets

Farm Productivity and Market Structure. Evidence From Cotton Reforms in Zambia

This paper investigates the impacts of cotton marketing reforms on farm productivity, a key element for poverty alleviation, in rural Zambia. The reforms comprised the elimination of the Zambian cotton marketing board that was in place since 1977. Following liberalization, the sector adopted an outgrower scheme, whereby firms provided extension services to farmers and sold inputs on loans that were repaid at the time of harvest. There are two distinctive phases of the reforms: a failure of the outgrower scheme, and a subsequent period of success of the scheme. Our findings indicate that the reforms led to interesting dynamics in cotton farming. During the phase of failure, farmers were pushed back into subsistence and productivity in cotton declined. With the improvement of the outgrower scheme of later years, farmers devoted larger shares of land to cash crops, and farm productivity significantly increased.cotton marketing reforms, farm productivity

Burley tobacco clubs in Malawi : nonmarket institutions for exports

This paper studies nonmarket institutions that facilitate exports. In Malawi, as in many other developing countries, farmers face numerous constraints that disconnect them from export markets. The paper explores the role of a local institution, the burley tobacco clubs, in bridging smallholders to exports. Burley clubs potentially enable farmers to increase their tobacco farming productivity by providing services related to institutional access, collective action, economies of scale, and supporting network. Using matching methods and instrumental variable techniques, the authors find that tobacco club membership causes an increase of between 40-74 percent in output per acre and an increase of between 45-89 percent in tobacco sales per acre. Instead, neither the land share allocated to tobacco nor the unit value obtained by the producers is affected by club membership.Tobacco Use and Control,Alcohol and Substance Abuse,Crops&Crop Management Systems,Adolescent Health,Access to Finance

The WTO Doha Round, cotton sector dynamics, and poverty trends in Zambia

The Zambian cotton sector went through significant reforms during the 1990s. After a long period of parastatal control, a process of liberalization in cotton production and marketing began in 1994. These reforms were expected to benefit agricultural farmers. In Zambia, these are rural, often vulnerable, smallholders. The authors investigate the connection between the dynamics of the cotton sector and the dynamics of poverty and evaluate to what extent cotton can work as a vehicle for poverty alleviation. They find that cotton can indeed act as an effective mechanism for increased household welfare. They also find income gains associated with cotton production, as well as positive impacts on the long-run nutritional status of Zambian children. The impacts, however, are relatively small.Crops&Crop Management Systems,Environmental Economics&Policies,Agricultural Research,Economic Theory&Research,Livestock&Animal Husbandry

Trade and Labor Outcomes in Latin America's Rural Areas: A Cross-Household Surveys Approach

This paper explores the potential link between trade and labor outcomes in rural areas in Latin America by estimating cross household-survey regression models with microdata from 60 Latin American household surveys and country aggregate data. We find a significant positive association between labor outcomes in rural areas and some measures of international trade, in particular exports, trade as a share of GDP, and the price of exports. International trade has been associated with higher wages and labor income in rural areas, in particular for those workers located in the bottom quantiles of the conditional wage distribution. Instead, our results suggest that all individuals in rural areas benefit about the same due to higher export prices. Results for urban areas are rarely statistically significant.trade, wages, labor, rural, Latin America