Essays on poverty reduction in Myanmar

Abstract

This dissertation studies the effect on poverty in Myanmar of policies such as relaxing rice export licensing restrictions and implementing the national minimum wage. In addition, this study discovers the effect on poverty of traditional betel-quid chewing. Chapter one studies the impact of export liberalization on household welfare, using the policy of relaxing rice export licensing restrictions. The study mainly exploits the difference-in-differences (DD) method to identify the policy impact. Results show that the policy has a positive impact on rice production, through increased use of agricultural inputs such as labour and chemical fertilizer. Increased rice production leads to higher consumption among rice-cultivating households. However, other households - such as rural landless households, urban households, and non-export-crops cultivating households reduce consumption due to higher rice prices. Thus, only rich rice-cultivating households benefit from the policy and adverse effects are concentrated on poor households. We conclude, therefore, that the rice export liberalization policy hurts household welfare at the aggregate level. Chapter two studies the impact of the national minimum wage introduction on enterprise-level employment in Myanmar, using the difference-in-differences method. Results suggest that the minimum wage introduction raises enterprises’ average-monthly labour cost, which leads to decreased employment and then to increased investment in machinery and equipment. We find no discernible effects on profit as enterprises raise labour productivity. Small enterprises also take the burden of higher labour costs resulting from the minimum wage introduction, although they are legally exempt from enforcement. Chapter three examines the impact of chewing betel-quid on poverty incidence, using Myanmar data. To address the potential endogeneity in a household’s decision on chewing betel-quid, we use household and community characteristics as instruments. 2SLS results suggest that chewing betel-quid exacerbates poverty through the direct channel – crowding-out effects of betel-quid consumption and associated health expenditure - and the indirect channel - loss of participation in the household workforce due to illness.