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Prices and Poverty in Urban Ethiopia 1

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  • Tesfaye Alemayehu Gebremedhin
  • Stephen Whelan

Abstract

Poverty is an ongoing issue in Ethiopia. The identification of policy options to address the problem requires that poverty be measured accurately. One of the most important ingredients in the measurement of poverty is price. 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 indexes for urban Ethiopia, using data from four household surveys conducted between 1994 and 2000. The results indicate 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 high in urban Ethiopia, with poverty head count of over 40%. Poverty estimates and profile derived using poverty lines as cost of living deflators are similar to those obtained from preferred price indexes developed in the study. However, country-level consumer price indexes, which do not adjust for spatial cost of living differences, may result in misleading estimates and poverty profile. This may have implications for the allocation of resources for poverty alleviation purposes. Copyright 2008 The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Tesfaye Alemayehu Gebremedhin & Stephen Whelan, 2008. "Prices and Poverty in Urban Ethiopia 1," Journal of African Economies, Centre for the Study of African Economies, vol. 17(1), pages 1-33, January.
    • Handle: RePEc:oup:jafrec:v:17:y:2008:i:1:p:1-33
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    File URL: http://hdl.handle.net/10.1093/jae/ejm003
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    Cited by:

    1. 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.
    2. Beyene, Berhe Mekonnen, 2012. "The Effects of International Remittances on Poverty and Inequality in Ethiopia," Memorandum 13/2012, Oslo University, Department of Economics.
    3. 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.
    4. Alem, Yonas & Köhlin, Gunnar & Stage, Jesper, 2014. "The Persistence of Subjective Poverty in Urban Ethiopia," World Development, Elsevier, vol. 56(C), pages 51-61.
    5. Alem, Yonas, 2014. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Some Evidence from Ethiopia," RFF Working Paper Series dp-14-05-efd, Resources for the Future.
    6. Yonas Alem & Lisa Andersson, 2019. "International Remittances and Private Interhousehold Transfers: Exploring the Links," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 902-928, September.
    7. Ayelech Tiruwha Melese, 2015. "Living Wage Benchmark Report: Non-Metropolitan Urban Ethiopia, Ziway Region (July 2015)," Global Living Wage Coalition (GLWC) 15-01-03, Universidad Privada Boliviana.

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