Chronic Poverty in Urban Ethiopia: Panel Data Evidence

In the developing world, little is known about urban chronic poverty based on quantitative evidence mainly due to lack of data tracking the same households over time. In this paper, we analyse 3 waves of a unique and rich panel data set on 1500 households collected through the Ethiopian Urban Household Surveys from 1994 to 1997. Based on real total household expenditure per month as our preferred welfare indicator, our results indicate that there is a high level chronic poverty (25.9 %) more concentrated in central and northern cities. Households that experience transitory poverty constitute 23.0% of the total. Both the descriptive and econometric evidence indicate that chronic poverty has been associated with household composition, unemployment, lack of asset ownership, casual employment, lack of education, ethnicity, age and to a certain extent to female-headedness. Among ethnic groups, the Tigre are less likely to be chronically as opposed to the Gurage.