Shocks Informal Risk Sharing Strategies and Poverty Dynamics in Rural Ethiopia: Longitudinal Analysis
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Date
2006-08
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A.A.U
Abstract
Based on ERHS data, the study used two-step dynamic nonlinear panel data model to
analyze poverty dynamics, the implication of shocks and informal risk sharing strategies
on poverty dynamics. The model better explains the dynamic process of rural poverty in
Ethiopia, which reveals the existence of true state dependence. Size of land owned,
number of oxen, male headship and higher educational attainments reduces the risk of
poverty. Only drought sock and death experienced between I 977-1 983 E.C. have long term
impact on poverty dynamics, whereas the impact of idiosyncratic shocks is wiped out
shortly. Many of informal risk sharing strategies significantly reduce current poverty.
But in the long-tem receiving remittance and food gift prolongs poverty. While lending to
others and membership in Eqqub have poverty reducing impact both currently and in the
long-tem.
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Keywords
Poverty Dynamics in Rural Ethiopia, Informal Risk Sharing Strategies