Household-level Coping Strategies to Rainfall Income Shock: Evidence from Ethiopia

Abstract

Adverse weather shocks have become serious concerns in Africa, particularly for Ethiopian households, who remain highly vulnerable to droughts. This study investigates household-level coping strategies for managing drought risks and income shocks over a short period in Ethiopia. The analysis uses panel data that combine household survey with rainfall data for 2020. The estimations are conducted using Pooled OLS, Fixed-Effects, and instrument variable regressions. The results indicate that domestic remittance and government assistance primarily support households in adapting to drought risks. Furthermore, formal assistance from the governments and NGOs plays a crucial role in mitigating drought-induced income shocks. These findings underline the importance of formal assistance and the limitation of self-coping strategies such as remittance during emergencies.