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The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya1
Article first published online: 8 NOV 2010
© 2010 International Association of Agricultural Economists
Volume 42, Issue 3, pages 343–356, May 2011
How to Cite
Mghenyi, E., Myers, R. J. and Jayne, T.S. (2011), The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya1. Agricultural Economics, 42: 343–356. doi: 10.1111/j.1574-0862.2010.00518.x
- Issue published online: 4 APR 2011
- Article first published online: 8 NOV 2010
- Received 22 August 2008; received in revised form 4 January 2010; accepted 31 March 2010
- Household welfare;
- Maize price increases;
- Semiparametric estimation
This study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural Kenyan households. The usual first-order welfare approximation formula is extended to a second-order formula that allows for supply and demand responses to the price change. Results show that many rural households are not affected greatly by the price change, and there are about as many gainers as losers. However, these full sample results mask important differences across regions. Welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize. Semiparametric methods are used to investigate the relationship between income and the size of the welfare effect, and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty.