Gainers and losers from trade reform in Morocco

"Ravallion and Lokshin use Morocco's national survey of living standards to measure the short-term welfare impacts of prior estimates of the price changes attributed to various trade policy reforms for cereals - the country's main foodstaple. They find small impacts on mean consumption and inequality in the aggregate. There are both gainers and losers and (contrary to past claims) the rural poor are worse off on average after trade policy reforms. The authors decompose the aggregate impact on inequality into a vertical component (between people at different pre-reform welfare levels) and a horizontal component (between people at the same pre-reform welfare level). There is a large horizontal component which dominates the vertical impact of full de-protection. The diverse impacts reflect a degree of observable heterogeneity in consumption behavior and income sources, with implications for social protection policies. This paper -a product of the Poverty Team, Development Research Group - is part of a larger effort in the group to assess the distributional impact of economywide policy reforms"--World Bank web site.