Rural Poverty and Household Welfare During Adjustment: The Case of Smallholder in Coffee Producing High Land of Hararghie, Ethiopia
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Date
1997-06
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Addis Ababa University
Abstract
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.
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Keywords
Rural Poverty and Household Welfare