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Household-Level Consumption in Urban Ethiopia: The Impact of Food Price Inflation and Idiosyncratic Shocks

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  • Yonas Alem and Mans Soderbom

Abstract

We use survey data to investigate how urban households in Ethiopia coped with the food price shock in 2008 and idiosyncratic shocks.� Qualitative data indicate that the high food price inflation was by far the most adverse economic shock between 2004 and 2008, and that a significant proportion of households had to adjust food consumption in response.� Regression results indicate that households with low asset levels, and casual workers, were particularly adversely affected by high food prices.� In contrast, we find that household demographics and education matter little for the impact of the shock.� Our analysis of idiosyncratic shocks indicates that losing one's job is a serious, uninsurable shock.� We interpret the results as pointing to the importance of growth in the formal sector so as to generate more well-paid and stable jobs.� Our results also imply that aid programs responding to food price shocks can be made more efficient by targeting low-asset households with members on the fringe of the labor market.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2010-24.

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Date of creation: 01 Aug 2010
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Handle: RePEc:oxf:wpaper:csae-wps/2010-24

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Keywords: Consumption; food price inflation; shocks; Africa; urban Ethiopia;

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References

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  1. Robert M. Townsend, . "Risk and Insurance in Village India," University of Chicago - Population Research Center 91-3a, Chicago - Population Research Center.
  2. Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA.
  3. Bigsten, Arne & Shimeles, Abebe, 2008. "Poverty Transition and Persistence in Ethiopia: 1994-2004," World Development, Elsevier, vol. 36(9), pages 1559-1584, September.
  4. Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank.
  5. Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June.
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Cited by:
  1. Laura Kiku Rodriguez-Takeuchi & Katsushi S. Imai, 2011. "Food Price Surges and Poverty in Urban Colombia: New Evidence from Household Survey Data," Discussion Paper Series DP2011-33, Research Institute for Economics & Business Administration, Kobe University.

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