| Abstract: |
A CGE microsimulation model is used to study the poverty impacts of trade
liberalization in Zimbabwe. A sample of 14006 households from a 1995 household
survey is individually modeled in a CGE framework. The experiment performed is
a 50 percent reduction in all import tariffs. The sectors with the highest
initial tariffs are the non-export agriculture sectors and the most
export-intensive sectors are found in agriculture and in mining. The halving
of tariffs favors export-oriented sectors, mainly in agriculture, whereas
industrial sectors are hardest hit by the increased import competition. As
agriculture is intensive in unskilled labor and industry is intensive in
skilled labor, unskilled wages rise relative to skilled wages. The consumer
prices fall and this, together with increased unskilled wages, leads to a fall
in poverty. The fall in the price of manufactured food, which is consumed
mainly in urban areas, coupled with the large number of unskilled workers in
these urban areas, explains why poverty falls more here than in rural Zimbabwe. |