Chronic poverty in urban Ethiopia: panel data evidence

Abstract

There are good reasons to think that a substantial proportion of urban poverty is likely to be chronic or persistent in nature, but to date there has been limited quantitative evidence to back up this assertion due to a lack of data tracking the same households over time. In this paper, we analyse a three-wave panel data set in urban Ethiopia over the mid-1990 s. Our results indicate that there is a high level of chronic poverty, and that those who are chronically poor show distinct characteristics that are likely to be important factors underlying their chronic poverty. These include high household dependency rates; low levels of education; lack of asset ownership; and insecure, low return or no employment.

Acknowledgements

We gratefully acknowledge the helpful comments of Diana Mitlin and an anonymous referee on an earlier draft of this paper; as well as of participants at the Chronic Poverty Research Centre International Conference, 7–9 April 2003, where a first draft was presented. The usual disclaimer applies.

Notes

1. Note that in contrast to Bigsten et al. (2003) and Taddesse (1998), these results suggest that poverty increased between 1995 and 1997. The difference in these results is attributed primarily to the price adjustments made, which here have been based on more detailed price data. In any case, the changes are not statistically significant.

2. Interestingly, the subjective evaluations tend to be more accurate when people are becoming worse off than when they are becoming better off—and there is a general tendency for people to be pessimistic compared with the consumption measure. However, it is difficult to identify the reasons for this from the information available in the survey.

3. Kebeles are urban dwellers' associations and represent the lowest administrative units which consist of a number of households ranging in number from 500 to 1500.

4. A group of kebeles form weredas and a city is subdivided into different weredas.