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Welfare dynamics in rural Kenya and Madagascar


  • Christopher Barrett
  • Paswel Phiri Marenya
  • John Mcpeak
  • Bart Minten
  • Festus Murithi
  • Willis Oluoch-Kosura
  • Frank Place
  • Jean Claude Randrianarisoa
  • Jhon Rasambainarivo
  • Justine Wangila


This paper presents comparative qualitative and quantitative evidence from rural Kenya and Madagascar in an attempt to untangle the causality behind persistent poverty. We find striking differences in welfare dynamics depending on whether one uses total income, including stochastic terms and inevitable measurement error, or the predictable, structural component of income based on a household's asset holdings. Our results suggest the existence of multiple dynamic asset and structural income equilibria, consistent with the poverty traps hypothesis. Furthermore, we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households' defence of a critical asset threshold through asset smoothing.

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  • Christopher Barrett & Paswel Phiri Marenya & John Mcpeak & Bart Minten & Festus Murithi & Willis Oluoch-Kosura & Frank Place & Jean Claude Randrianarisoa & Jhon Rasambainarivo & Justine Wangila, 2006. "Welfare dynamics in rural Kenya and Madagascar," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 248-277.
  • Handle: RePEc:taf:jdevst:v:42:y:2006:i:2:p:248-277
    DOI: 10.1080/00220380500405394

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    References listed on IDEAS

    1. Hoddinott, John & Quisumbing, Agnes, 2003. "Methods for microeconometric risk and vulnerability assessments," Social Protection and Labor Policy and Technical Notes 29138, The World Bank.
    2. Philippa Bevan & Sandra Fullerton Joireman, 1997. "The perils of measuring poverty: Identifying the 'poor' in rural Ethiopia," Oxford Development Studies, Taylor & Francis Journals, vol. 25(3), pages 315-343.
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