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Determinants of Poverty in Rural Ethiopia: A Household Level Analysis

Awel, Ahmed Mohammed LU (2013) EKHR92 20131
Department of Economic History
Abstract
This paper investigates the dynamics of poverty in rural Ethiopia during the period from 1994 to 2009. In order to explore factors that decisively affect the possibility of falling into and exiting out of poverty, the paper uses six rounds of data and employs alternative dynamic probit model which handles the problem of serial correlation, unobserved individual heterogeneity, state dependence and the initial conditions problem. The estimation result shows that the likelihood of falling in to poverty in any round is a direct function of previous experience in poverty suggesting strong evidence for the existence of true state dependence. Socioeconomic variables like land size, oxen and other tropical livestock units have tremendous role in... (More)
This paper investigates the dynamics of poverty in rural Ethiopia during the period from 1994 to 2009. In order to explore factors that decisively affect the possibility of falling into and exiting out of poverty, the paper uses six rounds of data and employs alternative dynamic probit model which handles the problem of serial correlation, unobserved individual heterogeneity, state dependence and the initial conditions problem. The estimation result shows that the likelihood of falling in to poverty in any round is a direct function of previous experience in poverty suggesting strong evidence for the existence of true state dependence. Socioeconomic variables like land size, oxen and other tropical livestock units have tremendous role in reducing the probability of falling into poverty. Additionally, while demographic characteristics and drought has significant effect in the northern part, cash crop production plays a vital role for households in southern Ethiopia. Finally, the paper draws important policy implications that can be helpful for policy making and enlighten appropriate intervention areas. (Less)
Please use this url to cite or link to this publication:
author
Awel, Ahmed Mohammed LU
supervisor
organization
course
EKHR92 20131
year
type
H2 - Master's Degree (Two Years)
subject
keywords
poverty dynamics, state dependence, transitory shocks
language
English
id
3878740
date added to LUP
2013-08-23 15:22:57
date last changed
2013-08-23 15:22:57
@misc{3878740,
  abstract     = {This paper investigates the dynamics of poverty in rural Ethiopia during the period from 1994 to 2009. In order to explore factors that decisively affect the possibility of falling into and exiting out of poverty, the paper uses six rounds of data and employs alternative dynamic probit model which handles the problem of serial correlation, unobserved individual heterogeneity, state dependence and the initial conditions problem. The estimation result shows that the likelihood of falling in to poverty in any round is a direct function of previous experience in poverty suggesting strong evidence for the existence of true state dependence. Socioeconomic variables like land size, oxen and other tropical livestock units have tremendous role in reducing the probability of falling into poverty. Additionally, while demographic characteristics and drought has significant effect in the northern part, cash crop production plays a vital role for households in southern Ethiopia. Finally, the paper draws important policy implications that can be helpful for policy making and enlighten appropriate intervention areas.},
  author       = {Awel, Ahmed Mohammed},
  keyword      = {poverty dynamics,state dependence,transitory shocks},
  language     = {eng},
  note         = {Student Paper},
  title        = {Determinants of Poverty in Rural Ethiopia: A Household Level Analysis},
  year         = {2013},
}