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The Persistence of Subjective Poverty in Urban Ethiopia

  • Alem, Yonas

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Köhlin, Gunnar

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Stage, Jesper

    ()

    (Dept of Social Sciences, Mid Sweden University)

Using panel data spanning 15 years, this paper investigates the persistence and correlates of subjective and consumption poverty in urban Ethiopia. Despite the decline in consumption poverty in recent years, which has been linked to rapid economic growth, subjective poverty has remained largely unchanged. Dynamic probit regression results show that households with a history of past poverty continue to perceive themselves as poor even if their material consumption improves. Our results also suggest that the relative economic position of households is a strong determinant of subjective poverty, and having at least some type of employment reduces the likelihood that households will perceive themselves as poor, even if they remain in objective poverty. Receiving remittances from abroad, on the other hand, does not reduce perceived poverty, even if it raises material consumption. We argue that any analysis to measure the impact of growth on welfare should encompass subjective measures as well.

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File URL: http://hdl.handle.net/2077/31780
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 549.

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Length: 22 pages
Date of creation: 19 Dec 2012
Date of revision:
Publication status: Published as Alem, Yonas, Gunnar Köhlin and Jesper Stage, 'The Persistence of Subjective Poverty in Urban Ethiopia' in World Development , 2015, pages 51-61.
Handle: RePEc:hhs:gunwpe:0549
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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