The Extent of Tariff Pass-Through to Agricultural Prices and Wage in Urban and Rural Regions in Iran

Abstract

Because of critical dependence of households to agricultural in terms of income and consumption identifying the effects of agriculture trade liberalization in developing countries is necessary. Effect of trade liberalization policies with respect to the factors that influencing price transmission from world markets to domestic market and wages are different and a similar trade policy will likely have different results in different countries. The aim of this study is investigate extent of tariff pass-through to prices of major groups of agricultural products and wages in different sector of country using pseudo-panel data in 2005- 2014. Results indicate an incomplete tariff pass-through for different groups of agricultural products. Also, tariff pass-through is different in urban and rural area and different regions. Results show different effect of agricultural tariff change on skilled and unskilled wages in urban and rural during the study. In addition, results show that sensitivity of skilled wage in both regions, particularly in rural to changes in tariff is more than unskilled wage. It is important for policymakers to consider market price transmission mechanism, infrastructure and regional wages changes and wage inequality from tariff changes.