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When do Relative Prices Matter for Measuring Income Inequality?: The Case of Food Prices in Mozambique

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  • Channing Arndt
  • Sam Jones
  • Vincenzo Salvucci

Abstract

Changes in the relative prices of commodities consumed in different shares across income groups are known to influence real measures of inequality. Using household budget survey and price data in Mozambique from 2002/03 and 2008/09, we show that accounting for the relative price changes driven by the food and fuel price crisis substantially increases real inequality, by about two Gini points. This result is obtained by computing a price deflator that explicitly reflects divergent price dynamics of different product categories.

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  • Channing Arndt & Sam Jones & Vincenzo Salvucci, 2014. "When do Relative Prices Matter for Measuring Income Inequality?: The Case of Food Prices in Mozambique," WIDER Working Paper Series wp-2014-129, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2014-129
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    Cited by:

    1. Carlos Garcimartín & Jhonatan Astudillo & André Martínez, 2021. "Inflation and income distribution in Central America, Mexico, Panama, and the Dominican Republic," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 315-339, February.
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    3. Channing Arndt & Lionel Demery & Andy McKay & Finn Tarp, 2015. "Growth and Poverty Reduction in Tanzania," WIDER Working Paper Series wp-2015-051, World Institute for Development Economic Research (UNU-WIDER).
    4. Cornia Giovanni Andrea, 2018. "Eradicating Poverty by the Year 2030: Implications for Income Inequality, Population Policies, Food Prices (and Faster Growth?)," Journal of Globalization and Development, De Gruyter, vol. 9(2), pages 1-21, December.
    5. Rodriguez Castelan,Carlos & Lopez-Calva,Luis-Felipe & Lustig,Nora & Valderrama,Daniel, 2016. "Understanding the dynamics of labor income inequality in Latin America," Policy Research Working Paper Series 7795, The World Bank.
    6. Helen Barnes & Vanda Castelo & Finório Castigo & Antonio S. Cruz & Michell Mpike & Michael Noble & Gemma Wright, 2016. "Tax-benefit microsimulation modelling in Mozambique: A feasibility study," WIDER Working Paper Series 027, World Institute for Development Economic Research (UNU-WIDER).
    7. Gürer Eren & Weichenrieder Alfons, 2020. "Pro-rich inflation in Europe: Implications for the measurement of inequality," German Economic Review, De Gruyter, vol. 21(1), pages 107-138, April.
    8. Vollmer, Frank & Zorrilla-Miras, Pedro & Baumert, Sophia & Luz, Ana Catarina & Woollen, Emily & Grundy, Isla & Artur, Luis & Ribeiro, Natasha & Mahamane, Mansour & Patenaude, Genevieve, 2017. "Charcoal income as a means to a valuable end: Scope and limitations of income from rural charcoal production to alleviate acute multidimensional poverty in Mabalane district, southern Mozambique," World Development Perspectives, Elsevier, vol. 7, pages 43-60.
    9. Channing Arndt & Kristi Mahrt, 2017. "Is inequality underestimated in Mozambique? Accounting for underreported consumption," WIDER Working Paper Series 153, World Institute for Development Economic Research (UNU-WIDER).
    10. Arne Bigsten, 2018. "Determinants of the Evolution of Inequality in Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 27(1), pages 127-148.
    11. Salvucci, Vincenzo & Tarp, Finn, 2024. "Crises, prices, and poverty – An analysis based on the Mozambican household budget surveys 1996/97–2019/20," Food Policy, Elsevier, vol. 125(C).
    12. Ulrik Beck, 2015. "Keep it real: Measuring real inequality using survey data from developing countries," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    13. Eren Gürer & Alfons J. Weichenrieder, 2021. "Pro-rich Inflation and Optimal Income Taxation," Public Finance Review, , vol. 49(6), pages 815-844, November.
    14. Helen Barnes & Vanda Castelo & Finório Castigo & António S. Cruz & Michell Mpike & Michael Noble & Gemma Wright, 2016. "Tax-benefit microsimulation modelling in Mozambique: A feasibility study," WIDER Working Paper Series wp-2016-27, World Institute for Development Economic Research (UNU-WIDER).
    15. Eva-Maria Egger & Michael Keller & Jorge Mouco, 2021. "The socioeconomic impact of coal mining in Mozambique," WIDER Working Paper Series wp-2021-108, World Institute for Development Economic Research (UNU-WIDER).
    16. Carlos Gradín & Finn Tarp, 2019. "Investigating Growing Inequality in Mozambique," South African Journal of Economics, Economic Society of South Africa, vol. 87(2), pages 110-138, June.
    17. Baez Ramirez,Javier Eduardo & Inan,Osman Kaan & Nebiler,Metin, 2021. "Getting Real ? The Uneven Burden of Inflation across Households in Turkey," Policy Research Working Paper Series 9869, The World Bank.
    18. Arndt, Channing & Hussain, M. Azhar & Salvucci, Vincenzo & Østerdal, Lars Peter, 2016. "Effects of food price shocks on child malnutrition: The Mozambican experience 2008/2009," Economics & Human Biology, Elsevier, vol. 22(C), pages 1-13.
    19. Alfons J. Weichenrieder & Eren Gürer, 2020. "Inflation, Inflationsmessung und Zentralbankpolitik," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(11), pages 834-838, November.
    20. Carlos Gradín & Finn Tarp, 2019. "Investigating Growing Inequality in Mozambique," South African Journal of Economics, Economic Society of South Africa, vol. 87(2), pages 110-138, June.
    21. Ulrik Beck, 2015. "Keep it real: Measuring real inequality using survey data from developing countries," WIDER Working Paper Series wp-2015-133, World Institute for Development Economic Research (UNU-WIDER).
    22. Channing Arndt & Lionel Demery & Andrew McKay & Finn Tarp, 2015. "Growth and poverty reduction in Tanzania," WIDER Working Paper Series 051, World Institute for Development Economic Research (UNU-WIDER).
    23. Sam Jones & Finn Tarp, 2015. "Understanding Mozambique's growth experience through an employment lens," WIDER Working Paper Series wp-2015-109, World Institute for Development Economic Research (UNU-WIDER).
    24. Channing Arndt & Kristi Mahrt, 2017. "Is inequality underestimated in Mozambique?: Accounting for underreported consumption," WIDER Working Paper Series wp-2017-153, World Institute for Development Economic Research (UNU-WIDER).
    25. Hoi Wai Jackie Cheng, 2020. "Economic properties of data and the monopolistic tendencies of data economy: policies to limit an Orwellian possibility," Working Papers 164, United Nations, Department of Economics and Social Affairs.

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