Regional Agricultural Endowments and Shifts of Poverty Trap Equilibria: Evidence from Ethiopian Panel Data
Institute for International Economic Policy Working Paper No. 2011-01
50 Pages Posted: 27 Apr 2011
Date Written: April 6, 2011
We introduce new approaches to research on poverty traps, focusing on changes in patterns of equilibria over time and across regions, applied to the Ethiopia Rural Household Survey. We revisit the incidence of multiple equilibria using new nonparametric techniques; we also emphasize conditions of single equilibria that remain stagnant below the poverty line. We identify a single equilibrium in our initial interval (1994-1999) but find evidence that a second, higher equilibrium is emerging in the subsequent (1999-2004) interval. One of three major regions exhibits a deeply impoverished equilibrium that does not improve despite a national environment of pro-poor growth.
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