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Citation Information

Type Working Paper
Title Shocks, Safety-nets and Vulnerability to Poverty in Ethiopia
Author(s)
Publication (Day/Month/Year) 2015
URL https://www.researchgate.net/profile/Catherine_Porter2/publication/281774460_Shocks_Safety-nets_and_​Vulnerability_to_Poverty_in_Ethiopia/links/55f7d26808ae07629dcc23fb.pdf
Abstract
Whilst the measurement and determinants of poverty have been widely studied, vulnerability, or the threat of future poverty, has been more di?cult to investigate due to data paucity. We combine nationally representative household data with historical drought information to investigate causes of vulnerability to poverty in Ethiopia. We model consumption as a function of household assets, aggregate shocks (drought, food prices), and idiosyncratic shocks (job loss, death, illness). We simulate the realization of shocks based on their (heterogeneous) cross-sectional and historical distribution using bootstrapping and create expected future levels of consumption. We then calculate some of the new vulnerability measures proposed in the literature, including a vulnerability headcount as well as measures that are more sensitive to a worsening of the worst outcomes. If vulnerable households are de?ned as having a probability greater than 0.5 of falling below the poverty line, our estimates suggest that 42 percent of the population are vulnerable to absolute poverty (compared to 29 percent currently de?ned as poor). In terms of the key shocks driving the results, urban uneducated households (who are disproportionally female-headed) su?er disproportionately from food price shocks, whilst rural drought shocks are important, but are mitigated for participants in the national safety-net program. The results suggest that signi?cant welfare gains can be made from risk management and social protection.

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