Browsing by Author "Shimeles, Abebe"

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Can Africa Reduce Poverty by Half by 2015?
(Blackwell Publishing, 2007) Bigsten, Arne; Shimeles, Abebe
This study uses simulations to explore the possibility of halving the percentage of people living in extreme poverty in Africa by 2015. It is shown that initial levels of inequality and per capita consumption determine the cumulative growth and inequality reductions required to achieve the target. The study finds that on average Africa only needs a relatively modest annual rate of growth in per capita household consumption to halve poverty by 2015 if inequality remains unchanged. The trade-off between growth and changes in inequality varies greatly among countries and their policy-choices are thus quite different. In some cases small changes in income-distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option.
Can Africa Reduce Poverty by Half by 2015? The Case for a Pro-Poor Growth Strategy
(2005) Shimeles, Abebe; Bigsten, Arne; Department of Economics
This study uses simulations to explore the possibility of halving the percentage of people living in extreme poverty in Africa by 2015. A pro-poor growth-scenario and a constant-inequality scenario are compared. It is shown that initial levels of inequality and mean per capita income determine the cumulative growth and inequalityreduction required to achieve the target. The trade-off between growth and inequality varies greatly among countries and their policy-choices are thus quite different. In some cases small changes in income-distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option.
Community based health insurance schemes in Africa: The case of Rwanda
(2010-08) Shimeles, Abebe
Community-based health insurance schemes (Mutuelles) in Rwanda are one of the largest experiments in community based risk-sharing mechanisms in Sub-Saharan Africa for health related problems. This study examines the impact of the program on demand for modern health care, mitigation of out-of-pocket catastrophic health expenditure and social inclusiveness based on a nationally representative household survey using traditional regression approach and matching estimator popular in the evaluation literature. Our findings suggest that Mutuelles have been successful in increasing utilization of modern health care services and reducing catastrophic health related expenditure. According to our preferred method, higher utilization of health care services was found among the insured non-poor than insured poor households, with comparable effect in reducing health-related expenditure shocks. This reinforces the inequity already inherent in the Mutuelles system.
Essays on Poverty, Risk and Consumption Dynamics in Ethiopia
(2006) Shimeles, Abebe; Department of Economics
Paper 1. This paper analysed the state of poverty and income distribution in rural and urban Ethiopia during 1994-2000. Poverty declined from 1994 to 1997, and then increased to 2000. This finding is consistent with major events that took place in the country: peace and stability, reform and economic recovery during 1994-1997, then, drought, war with Eritrea and political instability during 1997-2000. To examine the robustness of these results, we used stochastic dominance criteria and model based decompositions of poverty and inequality. Poverty trends were unchanged regardless of where one sets the poverty line. Decomposition of inequality revealed that in rural areas 65% of overall inequality was due to location differences, access to market, size of land, dependency ratio in the household, and age of the household. In urban areas, 49% of inequality was attributed to differences in education, occupational categories, and household durables. The results therefore imply that inequality is caused mainly by structural factors with the possibility that it may persist over time before significant decline can be observed. Paper 2. Based on a rural and urban data set from Ethiopia, exiting from or re-entering poverty was found to depend on the time spent in or out of poverty. In comparison to urban areas, it was easier to exit or re-enter rural poverty. However, exiting poverty was more difficult the longer households were in that state, even more in urban than rural areas. In addition, the average time spent in poverty following a poverty spell is quite long for a typical household. Time-varying and other household characteristics were examined in the context of exiting and re-entering into poverty. Features of chronic poverty and vulnerability were also analysed and the policy implications discussed. Paper 3. This paper looked at the effect of variability in consumption (or consumption-risk) on rural and urban poverty and identified factors that reduce or induce it. The results indicate that consumption risk played an important role in the measured level and profile of poverty. Overall, the percentage in poverty increased dramatically when long-term consumption was adjusted for variability. Household size, sex of the head of the household, age, farming systems and town-fixed effects, endowments, parental background, all played significant roles in increasing or decreasing consumption risk. Paper 4. This paper looked at the dynamics of consumption within an inter-temporal utility-maximization framework. Its main objective was to investigate whether or not consumption had exemplified a martingale-process, that is, whether or not the life-cycle/permanent-income hypothesis would be confirmed. In that case, current consumption expenditure would not have been influenced by information available to the consumer with regard to income-earnings or wealth. Thus, transitory changes in income would not affect consumption. Results showed that current consumption responded to one-period lagged values of income and wealth, including consumption itself. This implies that consumption smoothing was constrained by transitory income and consumption shocks that could persist over time. A non-linear model of consumption dynamics was estimated and the solution for steady state consumption indicated no poverty traps.
Growth and Poverty Reduction in Ethiopia: Evidence from Household Panel Surveys
(2002) Taddesse, Mekonnen; Shimeles, Abebe; Kebede, Bereket; Bigsten, Arne; Department of Economics
The paper investigates the poverty impact of growth in Ethiopia by analysing panel data covering the period 1994 to 1997, a period of economic recovery driven by good weather, peace, and much improved macro economic management. Unlike most developing countries, urban and rural poverty in Ethiopia are not significantly different from each other. The analysis of the structure of poverty shows asset ownership, education, type of crops planted, dependency ratios, and location to be important determinants. Decomposition of changes in poverty into the growth and redistribution components indicates that potential poverty-reduction due to the increase in real per capita income was to some extent counteracted by worsening income distribution. The implications of the results for a pro-poor policy are discussed.
The persistence of urban poverty in Ethiopia: A tale of two measurements
(2008-01-08T07:58:56Z) Bigsten, Arne; Shimeles, Abebe
This paper investigates dynamics of poverty in urban Ethiopia using both subjective and objective definitions of poverty. The two sets of estimates of persistence and recurrence of poverty are similar, suggesting that consumption-based mobility estimates are not seriously distorted by measurement error.
Poverty dynamics in Ethiopia: state dependence
(2007-08-29T10:23:20Z) Islam, Nizamul; Shimeles, Abebe
This paper focuses on the persistency of poverty in rural and urban households in Ethiopia by estimating dynamic probit models. Unobserved heterogeneity, first order state dependence and serially correlated error component are allowed for. The empirical results for both rural and urban areas show that each of these components is statistically significant in characterising the dynamics of poverty in Ethiopia. Furthermore, risk of poverty increases with the number of household’s size. Moreover, land size is highly correlated (negatively) with that risk of poverty and the most important two cash crops (Coffee and Chat) has significant role in the alleviation of poverty in Ethiopia. Finally, the effect of true state dependence and transitory shocks in poverty persistency appears to be stronger among urban households than rural households.
Poverty Transition and Persistence in Ethiopia, 1994-2004
(Elsevier, 2008) Bigsten, Arne; Shimeles, Abebe