Once Poor always Poor? Exploring Consumption- and Asset-based Poverty Dynamics in Ethiopia

Abstract

This paper examines the dynamics of wellbeing in Ethiopia by assessing changes in
poverty status based on consumption and asset ownership. Using panel data from
the first two waves of the Ethiopia Socioeconomic Survey (ESS), we discover that
although the cross-sectional poverty remains relatively unchanged (approximately
30% in both 2012 and 2014), the proportion of the population experiencing
consumption poverty at some point during this period is 47%. An asset-based
measure of poverty exhibits fewer transitions in and out of poverty. Examination of
the direction and magnitude of change in consumption both at aggregate and subgroup
levels indicates that despite a stagnant poverty rate, consumption patterns
have changed significantly. The forward movers and non-poor households have
increased their share of spending on nutrient-dense foods, while the chronic poor
and backward movers have increased spending shares on staples (reduced on
nutrient-dense foods). Our findings indicate that availability of longitudinal data at
the household level provides additional insights on the dynamics of wellbeing that
would be impossible to understand using cross sectional data only.