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Household Exposure to Food Price Shocks in Rural Bangladesh

Hanan G. Jacoby & Basab Dasgupta

 

Abstract

Recent food price volatility has led to concerns about the exposure of the rural poor in Bangladesh to food price shocks. Yet, higher prices could also lead to improved terms of trade for sellers and higher rural wages for agricultural workers, both of which are likely to benefit the poor from rural areas. Our analysis shows that rural wages in Bangladesh responded positively to higher crop prices over the last decade. Moreover, using a general-equilibrium-consistent welfare index that accounts for such wage gains, we show that far from falling hardest on the poor the burden of higher food prices has been closer to being distributionally neutral.

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