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Informal risk sharing strategies and poverty dynamics in rural Ethiopia: longitudinal Analysis

Abstract: 

Based on Ethiopian Rural Household Survey (ERHS) data, this study used a two-step dynamic nonlinear panel data model to analyze the impact of informal risk sharing (IRS) strategies on poverty dynamics. The model better explains the dynamic process of rural poverty in Ethiopia, which reveals the existence of true state dependence confirming other empirical findings from Ethiopia using the same data. Size of land owned, number of oxen, male headship and higher educational attainment reduces the risk of poverty. Many of IRS strategies significantly reduce current poverty. However, in the long-tem receiving remittance and food gift prolongs poverty. While saving and quasi-saving means such as lending to others and membership in Eqqub have a poverty reducing impact both currently and in the long-tem. This implies institutional interventions that makes saving safe and more convenient through saving-oriented microfinance institutions, formal banks or postal saving arrangements may increase the capacity of self-insurance and reduce poverty. Conversely, the crowding out of some of informal arrangements, remittance and food gift, may have valuable social benefits through ameliorating adverse incentive problems

Corporate Author: 
Getnet Alemu and Edilegnaw Wale (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: 
Ethiopian Economic Association (EEA)
ISBN/ISSN: 
978-99944-54-06-8
Primary Descriptors: 

poverty

Secondary Descriptor: 

poverty Allivetion

Geographic Descriptors: 
Ethiopia, rural
Cataloge Date: 
02/27/2013
Broad Subject heading: 
Social Sector - Poverty
Call Number: 
330.963 PRO 2009
Serial Key Title: 
Proceedings of the Fifth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
II
Publication date: 
2013-12-27 23:09:00
Forum or Discussion date: 
2013-02-27 15:02:12
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annualy