Growth and Poverty Reduction in Ethiopia: Evidence from Household Panel Surveys

Abstract

The paper investigates the poverty impact of growth in Ethiopia by analysing panel data covering the period 1994 to 1997, a period of economic recovery driven by good weather, peace, and much improved macro economic management. Unlike most developing countries, urban and rural poverty in Ethiopia are not significantly different from each other. The analysis of the structure of poverty shows asset ownership, education, type of crops planted, dependency ratios, and location to be important determinants. Decomposition of changes in poverty into the growth and redistribution components indicates that potential poverty-reduction due to the increase in real per capita income was to some extent counteracted by worsening income distribution. The implications of the results for a pro-poor policy are discussed.