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Rural Policies, Price Change and Poverty in Tanzania: An Agricultural Household Model-Based Assessment

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  • Luca Tiberti
  • Marco Tiberti
Abstract
Exogenous shocks to farmers' consumption, production and labour market decisions are rarely considered accurately. For farm households, under labour market imperfections, such decisions are often interlinked. This calls for non-separable agricultural household models. According to this framework, second-order (or behavioural) effects include a direct (i.e., supply or demand reactions due to an exogenous shock) and an indirect (i.e., supply or demand adjustments to the endogenous variations in the shadow wage generated by the exogenous shock) component. Under large price changes or following structural interventions, such as those concerning land redistribution or mechanisation practices, neglecting such second-order effects on consumption and production can bias the final impact on household welfare. The main objective of this study is thus to develop a robust and comprehensive tool to evaluate the effect on household welfare of different agricultural policies in Tanzania and food price changes. A two-stage estimation strategy is adopted: the shadow price of labour is first estimated and then used to estimate production and demand systems as well as labour market functions. These models are subsequently used to simulate the effect on household welfare of a hypothetical 40% increase in the price of cereals and other crops and a hypothetical 10% increase in the hectares of arable land and in the use of ox-ploughs. The results are finally compared with the case in which a separable model is adopted.

Suggested Citation

  • Luca Tiberti & Marco Tiberti, 2015. "Rural Policies, Price Change and Poverty in Tanzania: An Agricultural Household Model-Based Assessment," Journal of African Economies, Centre for the Study of African Economies, vol. 24(2), pages 193-229.
    • Handle: RePEc:oup:jafrec:v:24:y:2015:i:2:p:193-229.
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    2. Francesca Marchetta & David E. Sahn & Luca Tiberti, 2018. "School or work?The role of weather shocks in Madagascar," Cahiers de recherche CREATE 2018-2, CREATE.
    3. Daniela Campus & Gianna Giannelli, 2016. "Is the Allocation of Time Gender Sensitive to Food Price Changes? An Investigation of Hours of Work in Uganda," Working Papers - Economics wp2016_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. Chen, Qiu & Mirzabaev, Alisher, 2016. "Evaluating the Impacts of Traditional Biomass Energy Use on Agricultural Production in Sichuan, China," Discussion Papers 250213, University of Bonn, Center for Development Research (ZEF).
    5. De Noni, Ivan & Orsi, Luigi & Corsi, Stefano, 2017. "The Collective Action as Potential Driver of Bottom-up Reconfiguration from Captive to Relational Value Chain. The Case Study of the Northern District in Sierra Leone," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 8(4), October.
    6. Ditzler, Lenora & Komarek, Adam M. & Chiang, Tsai-Wei & Alvarez, Stéphanie & Chatterjee, Shantonu Abe & Timler, Carl & Raneri, Jessica E. & Carmona, Natalia Estrada & Kennedy, Gina & Groot, Jeroen C.J, 2019. "A model to examine farm household trade-offs and synergies with an application to smallholders in Vietnam," Agricultural Systems, Elsevier, vol. 173(C), pages 49-63.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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