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Income portfolios in rural Ethiopia and Tanzania: Choices and constraints

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  • Stefan Dercon
  • Pramila Krishnan

Abstract

The article analyses the different income portfolios of households using survey data from rural Ethiopia and rural Tanzania. It suggests that the different portfolios held by households cannot be explained by their behaviour towards risk as is usually suggested. It is better explained by differences in ability, location, and in access to credit. A logit analysis of households with different income portfolios, controlling for the effects of location, suggests that entry into high‐return activities is determined by investment in particular skills or by access to capital.

Suggested Citation

  • Stefan Dercon & Pramila Krishnan, 1996. "Income portfolios in rural Ethiopia and Tanzania: Choices and constraints," Journal of Development Studies, Taylor & Francis Journals, vol. 32(6), pages 850-875.
  • Handle: RePEc:taf:jdevst:v:32:y:1996:i:6:p:850-875
    DOI: 10.1080/00220389608422443
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    References listed on IDEAS

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    1. Carter, Michael R., 1991. "Risk, Reciprocity and Conditional Self-Insurance in the Sahel: Measurement and Implications for the Trajectory of Agricultural Development in West Africa," Staff Papers 200542, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
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    1. Harold Alderman & Christina H. Paxson, 1994. "Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries," International Economic Association Series, in: Edmar L. Bacha (ed.), Economics in a Changing World, chapter 3, pages 48-78, Palgrave Macmillan.
    2. Stefan Dercon, 2002. "Income Risk, Coping Strategies, and Safety Nets," World Bank Research Observer, World Bank Group, vol. 17(2), pages 141-166, September.

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