The Effects of a Resource Boom on Wealth and Human Capital in Madagascar

Le résumé fourni par la source

Abstract We examine the impact of a six-fold increase in the global price of vanilla on smallholder vanilla-farming households in Madagascar. The price increase causes sizable gains in wealth for a broad proportion of the rural population in vanilla-growing areas. While there is no effect on overall labor supply, vanilla producers are more likely to remain working in agriculture. The increase in wealth also leads to improvements in adult psychological well-being, cognitive performance, and optimism about the economy. Our findings indicate that windfall gains from positive price shocks can have substantial welfare impacts.

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