Title_ Vulnerability to Poverty and Its Determinants in Rural Ethiopia

Author_ Abrham Seyoum TSEHAY

Pages 107-134

Abstract_ This study analyzes the vulnerability to poverty of smallholders in rural Ethiopia using a unique panel dataset, the Ethiopian Rural Household Survey which was collected from 15 peasant Associations covering 1359 households for the years 1994, 1999, 2004 and 2009. Three steps feasible generalized least squares and Principal component approaches are employed for this purpose. The results indicate that smallholders in rural Ethiopia in general are subjected to high levels of vulnerability to poverty as measured by a poverty threshold of 1 USD and a vulnerability threshold of 0. 5 using the consumption based approach. Both poverty incidence and vulnerability to poverty in rural Ethiopia are substantial but have opposite trends across survey rounds. While vulnerability to poverty increases steadily till 2004 before it moderately declines in the last round, the rate of poverty, on the contrary, declined consistently till the third round but considerably increased in the last round. However, vulnerability to poverty prevailed over poverty incidence in all the survey rounds indicating the need to give more focus on precautionary measures than merely safety net programs.

Keywords_ Vulnerability, Multi-dimensional Indices, Panel Data, Ethiopia