Welfare Dynamics in Rural Kenya and Madagascar

Journal of Development Studies, Forthcoming

UNDERSTANDING AND REDUCING PERSISTENT POVERTY IN AFRICA, Christopher B. Barrett, Michael R. Carter and Peter D. Little, eds., Routledge, 2008

Posted: 6 May 2005 Last revised: 23 May 2011

See all articles by Christopher B. Barrett

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

Paswel Marenya

Cornell University

John G. McPeak

Syracuse University - Department of Economics

Bart Minten

Cornell University - Food and Nutrition Policy Program; Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics

Festus Murithi

Kenya Agricultural Research Institute (KARI)

Willis Oluoch-Kosura

Independent

Frank Place

International Food Policy Research Institute (IFPRI)

Jean Claude Randrianarisoa

Cornell University - School of Applied Economics and Management

Jhon Rasambainarivo

Center for National Agricultural Research (FOFIFA)

Justine Wangila

World Argoforestry Centre (ICRAF)

Date Written: December 1, 2004

Abstract

This paper presents comparative qualitative and quantitative evidence from rural Kenya and Madagascar in an attempt to untangle the causality behind persistent poverty. We find striking differences in welfare dynamics depending on whether one uses total income, including stochastic terms and inevitable measurement error, or the predictable, structural component of income based on a household's asset holdings. Our results suggest the existence of multiple dynamic asset and structural income equilibria, consistent with the poverty traps hypothesis. Furthermore, we find supporting evidence of locally increasing returns to assets and of risk management behavior consistent with poor households' defense of a critical asset threshold through asset smoothing.

Suggested Citation

Barrett, Christopher B. and Marenya, Paswel and McPeak, John G. and Minten, Bart and Murithi, Festus and Oluoch-Kosura, Willis and Place, Frank and Randrianarisoa, Jean Claude and Rasambainarivo, Jhon and Wangila, Justine, Welfare Dynamics in Rural Kenya and Madagascar (December 1, 2004). Journal of Development Studies, Forthcoming, UNDERSTANDING AND REDUCING PERSISTENT POVERTY IN AFRICA, Christopher B. Barrett, Michael R. Carter and Peter D. Little, eds., Routledge, 2008, Available at SSRN: https://ssrn.com/abstract=716221

Christopher B. Barrett (Contact Author)

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

Paswel Marenya

Cornell University ( email )

Ithaca, NY 14853
United States

John G. McPeak

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

Bart Minten

Cornell University - Food and Nutrition Policy Program ( email )

BP 6313
Antananarivo 101
Madagascar
033 11 38520 (Phone)
261 20 2222198 (Fax)

Catholic University of Leuven (KUL) - Department of Agro-Engineering and Economics ( email )

Kardinaal Mercierlaan 92
Heverlee, B-3001
Belgium

Festus Murithi

Kenya Agricultural Research Institute (KARI) ( email )

Makindu
Kenya

Willis Oluoch-Kosura

Independent ( email )

Frank Place

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Jean Claude Randrianarisoa

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Jhon Rasambainarivo

Center for National Agricultural Research (FOFIFA) ( email )

Antananarivo
Madagascar

Justine Wangila

World Argoforestry Centre (ICRAF) ( email )

United Nations Avenue, Gigiri
P.O. Box 30677-00100 GPO
Nairobi
Kenya

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