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Prices and poverty in urban Ethiopia

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  • Gebremedhin, Tesfaye A.
  • 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.

Suggested Citation

  • Gebremedhin, Tesfaye A. & Whelan, Stephen, 2005. "Prices and poverty in urban Ethiopia," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137920, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare05:137920
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    References listed on IDEAS

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    1. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
    2. Hentschel, J. & Lanjouw, P., 1996. "Constructing an Indicator of Consumption for the Analysis of Poverty. Principles and Illustrations with Reference to Ecuador," Papers 127, World Bank - Living Standards Measurement.
    3. Angus Deaton & Salman Zaidi, 2002. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," World Bank Publications, The World Bank, number 14101.
    4. Kakwani, Nanak, 1993. "Statistical Inference in the Measurement of Poverty," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 632-639, November.
    5. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    6. Dercon, Stefan & Mekonnen, Tadesse, 1999. "A comparison of poverty in rural and urban Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 8(1).
    7. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
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    Cited by:

    1. Alem, Yonas & Köhlin, Gunnar & Stage, Jesper, 2014. "The Persistence of Subjective Poverty in Urban Ethiopia," World Development, Elsevier, vol. 56(C), pages 51-61.
    2. Alem, Yonas, 2014. "Poverty Persistence and Intra-Household Heterogeneity in Occupations: Some Evidence from Ethiopia," Discussion Papers dp-14-05-efd, Resources For the Future.
    3. 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.
    4. Alem, Yonas & Andersson, Lisa, 2015. "International Remittances and Private Inter-household Transfers: Exploring the Links," Working Papers in Economics 631, University of Gothenburg, Department of Economics.
    5. 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.
    6. Beyene, Berhe Mekonnen, 2012. "The Effects of International Remittances on Poverty and Inequality in Ethiopia," Memorandum 13/2012, Oslo University, Department of Economics.

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