Determinants of Rural Transient and Chronic Poverty: Evidence from Kenya

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Determinants of Rural Transient and Chronic
Poverty Evidence from Kenya

• Milu Muyanga, Miltone Ayieko and Mary Kwamboka
• Tegemeo Institute of Agricultural Policy and
  Development
• Egerton University (Kenya)
• P.O Box 20498, 0200 Nairobi
• Tel [phone]
• Email muyanga_at_tegemeo.org

Presentation at the Poverty and Economic Policy
(PEP) Research Network General Meeting June
19-22 2006, Addis Ababa, Ethiopia
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Contents

• Background
• Objectives
• Methods and data
• Rationale
• Results
• Policy implications

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Background

• Poverty, disease and ignorance were identified as
  major problems at independence
• Policy been geared towards addressing these
  challenges
• Countrys 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

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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

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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)

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Objectives

• Examine rural poverty dynamics
• Decompose household total poverty into chronic
  and transient poverty components
• Establish correlates to chronic, transient and
  total poverty
• Draw policy lessons

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Rationale

• High 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 poverty
• So are the appropriate respective policy
  responses

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Methods and Data

• Poverty dynamics economic transition matrices
• Examine movements across poverty lines
• Poverty 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

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Table 1 1997-2004 Economic transition matrix
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Table 2. Poverty decomposition
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Poverty decomposition (2)
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Table 3 Chronic and transient poverty by agro
regional zones
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Table 4 Poverty by education level of household
head
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Table 5 Poverty by age of household head
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Table 6 Poverty by acreage under crop
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Table 7. Determinants of poverty (Chronic)
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Table 7. Determinants of poverty (Transient)
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Policy implications

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

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Thanks