Export Taxes and Consumption: A ‘Natural Experiment’ from Côte d’Ivoire

I exploit the emergence of two de facto states in Côte d’Ivoire during the 2002- 2007 political crisis to examine the effects of an export tax reduction for cocoa beans on the living standards of farming households. Combining both spatial and temporal variations in exposure to a set of dichotomous tariff policies, I find that farmers in low tariff districts significantly increased their consumption expenditure relative to farmers in high tariff districts. I also provide evidence that the transmission of border prices to local farmers is a relevant mechanism through which the reduction of trade barriers enhances cocoa farmers’ living standards.