Transient seasonal and chronic poverty of peasants: Evidence from Rwanda
Using panel data from Rwanda, we estimate seasonal transient and chronic poverty indices, for different poverty lines, poverty indicators, equivalence scales, and with and without corrections for price variability and for the sampling scheme. We also estimate sampling standard errors for the poverty indices. The worst poverty crises occur after the dry season at the end of the year. Most of the severity of poverty comes from the seasonal transient component of annual poverty, while the seasonal component of the incidence of poverty is much smaller. Thus the actual differences in the severity of poverty, either between developing and industrial countries or between rural and urban areas in LDCs, may be much worse than is shown by the usual chronic annual poverty measures or by measures of seasonal incidence of poverty. The importance of the transient component suggests a need for an income stabilisation policy. However, the contribution of the global transient seasonal poverty is important for households clustered around the poverty line, but low for the poorest part of the chronically poor. Thus, policies fighting seasonal transient poverty are likely to concern the moderately poor rather than the very poor, as compared with policies against chronic poverty, which affect the very poor. The probability transition analysis across seasonal living standard distributions shows that mobility across quintiles is always very strong. The poverty crisis in the last season is more the result of many peasants falling into poverty than a decrease in the flow out of poverty. A ‘safety net’ policy aimed at the poor and the non-poor at this period would then be appropriate. We estimate equations of quantiles for household chronic and transient seasonal poverty. The agricultural choices of peasants are found to affect differently the two components of annual poverty that could therefore be addressed by a combination of policies specific to each component.
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