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Food prices and the wages of the poor: A low-cost, high-value approach to high-frequency food security monitoring

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Title Food prices and the wages of the poor: A low-cost, high-value approach to high-frequency food security monitoring
 
Creator Headey, Derek D.
Bachewe, Fantu Nisrane
Marshall, Quinn
Raghunathan, Kalyani
Mahrt, Kristi
 
Subject food prices
crises
food security
nutrition
wages
diets
monitoring
inflation
household income
early warning systems
 
Description International food prices have become increasingly volatile in recent decades, with “global food crises” in 2008, 2011 and most recently in 2022. The 2008 crisis prompted international agencies to ambitiously extend their monitoring of domestic food prices in developing countries to strengthen early warning systems and food and nutrition surveillance. However, food inflation by itself is not sufficient for measuring disposable income or food affordability; for that, one must measure either changes in income or changes in an income proxy. Here we propose the use of a low-cost income proxy that can be monitored at the same high frequency and spatial granularity as food prices: the wages of poor unskilled workers. While not all poor people are unskilled wage earners, changes in the real “reservation wages” of low skilled activities are likely to be highly predictive of changes in disposable income for poorer segments of society (Deaton and Dreze 2002). We demonstrate this by estimating changes in “food wages” – wages deflated food price indices – during well-documented food price crises in Ethiopia (2008, 2011 and 2022), Sri Lanka (2022) and Myanmar (2022). In all these instances, food wages declined by 20-30%, often in the space of a few months. Moreover, in Myanmar we use a household panel survey data to show that the decline in food wages over the course of 2022 closely matches estimate declines in household disposable income and proportional increases in income-based poverty. We argue that the affordability of nutritious food for “all people, at all times” is a critically important dimension of food security, and we advocate for monitoring the wages of the poor as a cheap and accurate means of capturing that dimension.
 
Date 2023-03-22
2023-03-23T19:23:40Z
2023-03-23T19:23:40Z
 
Type Working Paper
 
Identifier Headey, Derek D.; Bachewe, Fantu Nisrane; Marshall, Quinn; Raghunathan, Kalyani; and Mahrt, Kristi. 2023. Food prices and the wages of the poor: A low-cost, high-value approach to high-frequency food security monitoring. IFPRI Discussion Paper 2174. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.136614
https://hdl.handle.net/10568/129751
https://ebrary.ifpri.org/digital/collection/p15738coll2/id/136614
https://doi.org/10.2499/p15738coll2.136614
 
Language en
 
Relation IFPRI Discussion Paper https://ebrary.ifpri.org/digital/collection/p15738coll2/id/136457https://ebrary.ifpri.org/digital/collection/p15738coll2/id/133638 Working paper https://ebrary.ifpri.org/digital/collection/p15738coll2/id/126975
IFPRI Discussion Paper
 
Rights Other
Open Access
 
Format 21 p.
application/pdf
 
Publisher International Food Policy Research Institute