Ensuring Escapes from Poverty are Sustained in Rural Ethiopia

Economic growth, particularly in the agricultural sector, has occurred alongside large public investments in social programs and rural roads. However, more recent economic growth has been less inclusive, with the consumption of the bottom 40 percent growing slower than that of the top 60 percent between 2005 and 2011. Transitory poverty escapes, or households that successfully escape from poverty only to return to living in it once again, are a significant phenomenon in rural Ethiopia. Analysis of the Ethiopia Rural Household Survey (ERHS) reveals that between 1997 and 2000, 15 percent of all households experienced a transitory poverty escape. Of those households that escaped poverty between 1997 and 2004, around 65 percent were again living in poverty by 2009. Macro-level drivers of transitory escapes include the slow pace of structural transformation in the country, food price inflation, and increased vulnerability of farming conditions due to land pressures and climate variability. Household characteristics, resources, activities, and strategies play a crucial role in determining whether households experience sustained escapes from poverty or transitory escapes. High fertility, combined with a shrinking resource base, increases the likelihood of transitory escapes and impoverishment. Female-headed households are less at risk of transitory poverty escapes and impoverishment relative to sustained poverty escapes. Households containing a person with a disability are more likely to experience a transitory escape or become impoverished. Increases in per capita expenditure and asset values are associated with a reduced risk of transitory escapes relative to sustained escapes. Education and skills acquisition are critical factors in enabling households to escape poverty sustainably. Households where the head member has completed primary education have a reduced risk of experiencing transitory poverty escapes. Livestock is an important asset that reduces the likelihood of transitory escapes, as it can be sold in times of crisis or to pay for life events. A working household head, engaged either as a laborer or self-employed, increases the likelihood of sustained escapes. Participation in iddir, an informal risk-sharing arrangement, increases the likelihood of transitory escapes and impoverishment. Recommendations for improving poverty dynamics in Ethiopia include a stronger focus on family planning and supporting sustained poverty escapes by endowing women with more skills and providing avenues to put the acquired skills to use. Education and skills acquisition are critical factors in enabling households to escape poverty sustainably. Improving access to education, particularly for women, and providing training and skills development programs can help households to acquire the necessary skills to escape poverty and remain out of it. Additionally, supporting households in developing risk management strategies, such as saving and insurance, can help to reduce the likelihood of transitory escapes and impoverishment.