The Urban Poor and the Payday: The Pay of the Day Matters, But So Does the Day of that Pay
Although it has been shown that the poor are more responsive to food price changes than other people, they still may face higher food prices. Evidence from Zaire shows that there exists a movement within the month in food prices corresponding to changes in food supply and food demand. This movement is caused by increased income and demand at the end ofthe month due to a fixed pay date. This movement is especially harmful for the poor, who buy in small quantities. Using a Benthamite social welfare junction, it is shown that rescheduling the payday for different sectors or splitting up payments in smaller amounts will result in higher social welfare.
Charles H. Dyson School of Applied Economics and Management, Cornell University