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Poverty dynamics in Ethiopia: state dependence

Author

Listed:
  • Islam, Nizamul

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Shimeles, Abebe

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper focuses on the persistency of poverty in rural and urban households in Ethiopia by estimating dynamic probit models. Unobserved heterogeneity, first order state dependence and serially correlated error component are allowed for. The empirical results for both rural and urban areas show that each of these components is statistically significant in characterising the dynamics of poverty in Ethiopia. Furthermore, risk of poverty increases with the number of household’s size. Moreover, land size is highly correlated (negatively) with that risk of poverty and the most important two cash crops (Coffee and Chat) has significant role in the alleviation of poverty in Ethiopia. Finally, the effect of true state dependence and transitory shocks in poverty persistency appears to be stronger among urban households than rural households.

Suggested Citation

  • Islam, Nizamul & Shimeles, Abebe, 2007. "Poverty dynamics in Ethiopia: state dependence," Working Papers in Economics 260, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0260
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    File URL: http://hdl.handle.net/2077/4730
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," LISER Working Paper Series 2012-31, Luxembourg Institute of Socio-Economic Research (LISER).
    2. Thomas, Anne-Claire & Gaspart, Frédéric, 2015. "Does Poverty Trap Rural Malagasy Households?," World Development, Elsevier, vol. 67(C), pages 490-505.
    3. Azomahou T.T. & Yitbarek E., 2015. "Poverty persistence and informal risk management: Micro evidence from urban Ethiopia," MERIT Working Papers 2015-006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Olabimtan Adebowale & David Lawson, 2018. "How does access to formal finance affect household welfare dynamics? Micro evidence from Nigeria," Global Development Institute Working Paper Series 242018, GDI, The University of Manchester.
    5. Tsehay, Abrham Seyoum & Bauer, Siegfried, 2012. "Poverty Dynamics and Vulnerability: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 126780, Agricultural and Applied Economics Association.
    6. FAYE Ousmane & ISLAM Nizamul & ZULU Eliya, 2011. "Poverty dynamics in Nairobi's slums: testing for true state dependence and heterogeneity effects," LISER Working Paper Series 2011-56, Luxembourg Institute of Socio-Economic Research (LISER).
    7. Tsehay, Abrham Seyoum & Bauer, Siegfried, 2012. "Poverty and Vulnerability Dynamics: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(4), pages 1-32, November.
    8. repec:dau:papers:123456789/10594 is not listed on IDEAS
    9. Bigsten, Arne & Shimeles, Abebe, 2008. "Poverty Transition and Persistence in Ethiopia: 1994-2004," World Development, Elsevier, vol. 36(9), pages 1559-1584, September.
    10. Tsehay, Abrham Seyoum & Bauer, Siegfried, 2012. "Poverty Dynamics and Vulnerability: Empirical Evidence from Smallholders in Northern Highlands of Ethiopia," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126873, International Association of Agricultural Economists.

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    More about this item

    Keywords

    Poverty persistency; State dependence; Unobserved heterogeneity;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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