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Heterogeneous wealth dynamics: On the roles of risk and ability

Paulo Santos and Christopher Barrett ()

No 36-16, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper studies the causal mechanisms behind persistent poverty. Using original data on Boran pastoralists of southern Ethiopia, we find that heterogeneous and nonlinear wealth dynamics arise purely in adverse states of nature. In favorable states, expected herd grow is quasi-linear and universal. We further show that those with lower herding ability, as reflected in past herd growth data, converge to a unique equilibrium at a small herd size while those with higher ability exhibit multiple stable dynamic wealth equilibria.

New Economics Papers: this item is included in nep-agr
Date: 2016-11
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Related works:
Chapter: Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability (2017) Downloads
Working Paper: Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability (2016) Downloads
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