Farm Wage and Rice Price Dynamics in Bangladesh

Concepts regarding wage-price nexus in Bangladesh are diverse and conflicting. A proper understanding of the relationship between food prices and rural wages is essential for policy planning relating to the rural poor. In exploring the link between food prices and rising rural wages, this study critically examines previous studies and updates the dynamic relations by using the monthly data from 1994 to 2106. Vector error correction mechanism (VECM) is implemented to determine the long and short run relationships between wages and food prices. Findings from this study show that in the long run food prices are not a single major factor to explain the variation of rural wages in the national level, and the influence of urban wages become stronger in some places. Additionally, this study discloses the major drivers such as foreign remittances, rainfalls that have a significant impact on farm wages. However, divisions, where changes in wages are not related to food prices, may require different policies regarding poverty and price stability contrast to the divisions where both wages and prices are well cointegrated. Acknowledgement : This research acknowledges the efforts and supports provided by Prof. von Braun from University of Bonn, Naser Ahmed the director general of Food Planning and Monitoring Unit (FPMU) of Bangladesh and Dr. Sajjad Zohir from Economic Research Group (ERG) of Bangladesh.

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Conference Paper/ Presentation
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JEL Codes:
J23; J21

 Record created 2018-10-02, last modified 2020-10-28

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