Nutrition-productivity link and the persistence of poverty

In poor societies where nutrition and health status is very low, consumption of basic needs amounts to investment. It enhances labour productivity and reduces morbidity. In this paper it is shown that inequality can persist in rural Ethiopia due to the existence the low nutrition- low productivity trap. It is done mainly by establishing the link between nutrition and health on the one hand and labour productivity on the other. Using a panel data from rural Ethiopian households, farm production functions as well as earnings functions are estimated. In both cases, calorie intakes do affect the labour productivity of farm households. However, the effect of the stock of nutrition on productivity is observed only in the earnings function. For workers employed in social safety nets such as food for work programs, the productivity effect of nutrition is minimal. Moreover our estimates indicate that the returns to calorie intakes are much larger than that of chemical fertilizers.