Determinants of Rural Transient and Determinants of Rural Transient and Chronic Poverty:Chronic Poverty: Evidence from KenyaEvidence from Kenya

Milu Muyanga, Miltone Ayieko and Mary KwambokaTegemeo Institute of Agricultural Policy and Development

Egerton University (Kenya)P.O Box 20498, 0200 Nairobi

Tel +254 20 2717818/2717876Email: muyanga@tegemeo.org

Presentation at the Poverty and Economic Policy (PEP) Research Network General Meeting

June 19-22 2006, Addis Ababa, Ethiopia

ContentsBackgroundObjectives Methods and dataRationaleResultsPolicy implications

BackgroundPoverty, disease and ignorance were identified as major problems at independence

Policy been geared towards addressing these challenges

Country’s economic performance has been low

High poverty incidences have been witnessed ¾ poor live in the rural areas Pockets of high poverty in some regions with poverty below the

national average

Background (2)Non-income indicators worsened High illiteracy rates Life expectancy declined Infant and child mortality worsened Stunted children increased Vaccination levels low Gender disparities have persisted

Background (3)Government Response National Poverty Eradication Plan (NPEP) Poverty Reduction Strategy Paper (PRSP)

Consultative Medium Term Expenditure Framework (MTEF)

Economic Recovery Strategy for Wealth Employment Creation (ERSWEC)

United Nations endorsed Millennium Development Goals (MDGs)

Objectives 1. Examine rural poverty dynamics2. Decompose household total poverty into

chronic and transient poverty components 3. Establish correlates to chronic, transient

and total poverty 4. Draw policy lessons

RationaleHigh poverty incidences have created a desire for empirical studies Most earlier studies of poverty have been static in nature Determinants of chronic poverty are likely to be different from those of transient povertySo are the appropriate respective policy responses

Methods and Data Poverty dynamics: economic transition matrices

Examine movements across poverty linesPoverty decomposition

Jalan and Ravallion approach Equally Distributed Equivalent (EDE) poverty gaps approach Corrected for statistical biases

Determinants of poverty components correlates Regress total, chronic and transient poverty on a set of a common

household characteristics Use censored quantile regression model

Data: Tegemeo/MSU panel data (1997, 2000 and 2004) Income is welfare measure Deflated Equivalence scales used

Table 1: 1997-2004 Economic transition matrix 2004

Below food

poverty

Between food and

absolute poverty

Above absolute

poverty

Total

Below food

poverty

18.3% 3.1% 16.5% 38.0%

Between food

and absolute

poverty

4.4% 2.5% 3.4% 10.3%

Above absolute

poverty

17.6% 4.8% 29.3% 51.7%

1997

Total 40.3% 10.4% 49.2% 100%

Table 2. Poverty decompositionIndex J&R % EDE %

Transient poverty 0.077 44 0.080 19

Chronic poverty 0.096 56 0.336 81

Total poverty 0.173 100 0.416 100

Poverty decomposition (2)

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0 500 1000 1500 2000 2500Pov erty line-Ksh

Total Pov erty Transient Poverty

Chronic Pov erty Ratio = Transient/Chronic

Figure 1: JR Transient and chronic poverty

Table 3: Chronic and transient poverty by agro regional zones Group Total Poverty Proportion Transient Chronic

Central highlands 0.052 13.2% 4.5% 2.2%

Coastal lowlands 0.198 30.6% 39.1% 21.3%

Eastern lowlands 0.176 21.1% 24.6% 11.4%

High potential maize zone 0.141 10.3% 6.2% 13.1%

Western highlands 0.223 4.3% 5.1% 5.9%

Western lowlands 0.347 9.2% 10.6% 36.0%

Western transitional 0.157 11.3% 9.9% 10.2%

TOTAL 0.178 100.0% 100.0% 100.0%

Table 4: Poverty by education level of household head Group Total Poverty Proportion Transient Chronic

None 0.210 22.5% 23.1% 34.5%

Unfinished primary 0.194 42.4% 46.3% 45.6%

Primary 0.179 19.1% 20.4% 16.2%

Unfinished secondary 0.107 8.6% 6.6% 1.7%

Form 4 0.073 5.5% 2.1% 2.6%

Form 6/post secondary training 0.089 1.8% 1.2% 0.0%

Graduate 0.043 0.2% 0.1% 0.0%

TOTAL 0.178 100.0% 100.0% 100.0%

Table 5: Poverty by age of household head

Group Total Poverty Proportion Transient Chronic

under 6 year 0.438 0.1% 0.2% 0.0%

6-16 years 0.126 0.6% 0.5% 0.0%

17-39 years 0.153 27.0% 25.8% 16.2%

over 40 years 0.188 72.4% 73.2% 84.4%

TOTAL 0.178 100.0% 100.0% 100.0%

Table 6: Poverty by acreage under crop Group Total Poverty Proportion Transient Chronic

2 and below 0.225 17.9% 20.0% 29.0%

2-4 acres 0.209 33.9% 39.8% 39.6%

4-6 acres 0.162 19.0% 16.4% 19.7%

6-8 acres 0.148 13.0% 12.6% 6.5%

8-10 acres 0.152 5.6% 6.7% 0.0%

over 10 acres 0.081 10.6% 3.9% 6.9%

TOTAL 0.178 100.0% 100.0% 100.0%

Table 7. Determinants of poverty (Chronic)

Variable Chronic Household size ** Female headed ** Primary education ** Secondary education dummy ** Post secondary education dummy ** Dependency ratio ** Physical assets value ** Cultivated land ** Crop diversification index ** Income diversification index * Credit access dummy ** Fertilize use dummy **

* significant at 5%; ** significant at 1%

Table 7. Determinants of poverty (Transient)

Variable Transient Household size * Secondary education dummy * Post secondary education dummy ** Physical assets value * Cultivated land * Crop diversification index * Credit access dummy * Fertilize use dummy *

* significant at 5%; ** significant at 1%

Policy implications There has been significant movements in and out of poverty Chronic poverty dominates transient povertyTargeting Large households Headed by females Regions High dependency ratioPolicy variables Education Diversification of income and crops grown Physical assets stock Cultivated land acreage

Thanks