Rural Poverty and Household Welfare During Adjustment: The Case of Smallholder in Coffee Producing High Land of Hararghie, Ethiopia

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Addis Ababa University


The study attempts to measure the change in welfare and poverty that occurred in the wake of policy reform implemented in Ethiopia. For this purpose, two periods (1994/95 and 1996/97) were taken for the study. The data for 1994/95 were obtained from CSA while for 1996/97 were collected by the author. Anal ysis of income transfer and real income effect of policy reform indicated that resources were taken out of agriculture and hence low real income (showing welfare losses) received by-raral household compared to the real income-that they would have to receive in the absence of intervention. Moreover, evidence pointed that over 90 per cent of welfare loss were due to direct tax levied on agricultural and non-agricultural goods. During 1994/95 - 1996/ 97, the level of poverty (incidence, depth and severity) increased due to decline in mean per capita consumption. However, the rise in per capita consumption of the poor contributed in reducing the rate of increase in poverty. Decomposition of poverty changes further showed that the rise in poverty were attributed to decline in mean expenditure. However, the improvement in the distribution played the major role in decreasing the effect of decline in per capita expenditure on generation of poverty. Finally, the elasticity estimates emphasized the role of growth inducing policies than inequality reducing policies which plays pajama or role in reducing poverty since already stable dis retribution is attained in the area.



Rural Poverty and Household Welfare