This paper investigates the state of poverty and its determinants covering the period 1994 -1997 on the basis of a panel data that covers 3,000 households both from urban as well as rural areas. The main findings show that poverty on the average declined during this period mainly due to increase in per capita income, particularly in rural areas. The extent of the reduction in poverty would have been much stronger if not for the worsening of income inequality. Profile of poverty shows that poverty in Ethiopia affects urban as well as rural areas at comparable scale and intensity. At the household level, factors such as human and physical capital bear a strong influence on the probability of being poverty. Factors such as access to markets, resources and urbanization affect greatly on the chance of being in poverty.


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