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Prices and Poverty in Urban Ethiopia

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  • Gebremedhin, Tesfaye
  • Whelan, Stephen

Abstract

Poverty is an ongoing issue in Ethiopia. The identification of policy options to address the problem primarily requires that poverty be measured accurately. One of the most important ingredients in the measurement of poverty are prices. The magnitude of poverty is affected by how cost of living differences across time and regions are adjusted. This paper derives a set of price indices for Urban Ethiopia using data from four urban household surveys conducted in 1994, 1995, 1997, and 2000. The results show that the cities of Dire Dawa and Mekelle are the two most expensive cities, while Jimma and Bahir Dar are the least expensive. The findings also confirm that poverty is indeed high in urban Ethiopia with poverty head count of over 40 percent. Poverty estimates derived using country level consumer price indexes, which do not adjust for spatial cost of living differences, are misleading. But using poverty lines as deflators to account for price differences does not affect the poverty estimates obtained.

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File URL: http://hdl.handle.net/2123/7636
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Bibliographic Info

Paper provided by University of Sydney, School of Economics in its series Working Papers with number 5.

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Date of creation: Apr 2005
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Handle: RePEc:syd:wpaper:2123/7636

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Postal: Sydney, NSW 2006
Phone: 61 +2 9351 5055
Fax: 61 +2 9351 4341
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Web page: http://sydney.edu.au/arts/economics
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Related research

Keywords: Poverty; Urban Ethiopia; Price indexes;

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References

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  1. Ravallion, Martin & Bidani, Benu, 1993. "How robust is a poverty profile?," Policy Research Working Paper Series 1223, The World Bank.
  2. Angus Deaton & Salman Zaidi, 1999. "Guidelines for Constructing Consumption Aggregates For Welfare Analysis," Working Papers 217, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  4. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
  5. Kakwani, Nanak, 1993. "Statistical Inference in the Measurement of Poverty," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 632-39, November.
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Cited by:
  1. Gebremedhin, Tesfaye A., 2006. "The Dynamics of Poverty in Urban Ethiopia," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139737, Australian Agricultural and Resource Economics Society.
  2. Alem, Yonas & Köhlin, Gunnar & Stage, Jesper, 2012. "The Persistence of Subjective Poverty in Urban Ethiopia," Working Papers in Economics 549, University of Gothenburg, Department of Economics.
  3. Beyene, Berhe Mekonnen, 2012. "The Effects of International Remittances on Poverty and Inequality in Ethiopia," Memorandum 13/2012, Oslo University, Department of Economics.
  4. Alem, Yonas, 2013. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Evidence from Urban Ethiopia," Working Papers in Economics 580, University of Gothenburg, Department of Economics.

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