The Persistence of Subjective Poverty in Urban Ethiopia

Yonas Alem, Gunnar Köhlin and Jesper Stage

No 549, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Using panel data spanning 15 years, this paper investigates the persistence and correlates of subjective and consumption poverty in urban Ethiopia. Despite the decline in consumption poverty in recent years, which has been linked to rapid economic growth, subjective poverty has remained largely unchanged. Dynamic probit regression results show that households with a history of past poverty continue to perceive themselves as poor even if their material consumption improves. Our results also suggest that the relative economic position of households is a strong determinant of subjective poverty, and having at least some type of employment reduces the likelihood that households will perceive themselves as poor, even if they remain in objective poverty. Receiving remittances from abroad, on the other hand, does not reduce perceived poverty, even if it raises material consumption. We argue that any analysis to measure the impact of growth on welfare should encompass subjective measures as well.

Keywords: Ethiopia; subjective poverty; dynamic probit (search for similar items in EconPapers)
JEL-codes: I32 O12 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2012-12-19
New Economics Papers: this item is included in nep-afr and nep-dev
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Citations: View citations in EconPapers (4)

Published as Alem, Yonas, Gunnar Köhlin and Jesper Stage, 'The Persistence of Subjective Poverty in Urban Ethiopia' in World Development , 2015, pages 51-61.

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Journal Article: The Persistence of Subjective Poverty in Urban Ethiopia (2014)
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