Modeling the Impact of Agricultural Growth and Government Policy on Income Distribution in India |
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Authors: | Hans Binswanger; Quizon Jaime |
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Institution: | Jaime Quizón is at Chase Econometrics, Philadelphia.
Hans Binswanger is at the World Bank. |
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Abstract: | This article uses a limited general equilibrium model to investigatethe growth and equity effects of a variety of economic and technicalchanges and selected agricultural policies in India. It exploreshow changes in food prices, rural wages, and farm profits associatedwith the Green Revolution period affected income distributionbetween net buyers and sellers of food. The model shows thatincome gains from the Green Revolution initially accrued tothe wealthier rural groups but that after 197273 theywere transferred to urban consumers and that by 198081the per capita incomes of poor and wealthier rural groups alikewere barely above their respective 196061 levels. Themodel is also used in counterfactual analysis of the impactof changes in technological, demographic, investment, taxation,and income redistribution variables. Its findings indicate theimportance of trade policies for the nature of the equity outcomesfrom agricultural growth and suggest that a reduction in populationgrowth and an increase in nonagricultural employment and incomeare required to convert agricultural growth into reduced ruralpoverty. |
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