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Household-Level Consumption in Urban Ethiopia: The Impact of Food Price Inflation and Idiosyncratic Shocks

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  • Yonas Alem
  • Måns Söderbom

Abstract

We use survey data to investigate how urban households in Ethiopia coped with the food price shock in 2008 and idiosyncratic shocks. Qualitative data indicate that the high food price inflation was by far the most adverse economic shock between 2004 and 2008, and that a significant proportion of households had to adjust food consumption in response. Regression results indicate that households with low asset levels, and casual workers, were particularly adversely affected by high food prices. In contrast, we find that household demographics and education matter little for the impact of the shock. Our analysis of idiosyncratic shocks indicates that losing one’s job is a serious, uninsurable shock. We interpret the results as pointing to the importance of growth in the formal sector so as to generate more well-paid and stable jobs. Our results also imply that aid programs responding to food price shocks can be made more efficient by targeting low-asset households with members on the fringe of the labor market.

Suggested Citation

  • Yonas Alem & Måns Söderbom, 2010. "Household-Level Consumption in Urban Ethiopia: The Impact of Food Price Inflation and Idiosyncratic Shocks," CSAE Working Paper Series 2010-24, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:2010-24
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    3. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, June.
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    Cited by:

    1. Rodriguez-Takeuchi, Laura & Imai, Katsushi S., 2013. "Food price surges and poverty in urban Colombia: New evidence from household survey data," Food Policy, Elsevier, vol. 43(C), pages 227-236.

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    More about this item

    Keywords

    consumption; food price inflation; shocks; Africa; urban Ethiopia;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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