Abstract
This study analyzes uni-and multidimensional poverty and inequalities in rural and small towns in Ethiopia. Unlike the unidimensional measure, the multidimensional measure of poverty shows all the channels through which poverty may manifest itself; it also shows the extent of deprivation. The analysis uses 6 dimensions with 14 indicators to construct a multidimensional index of poverty and inequalities using Ethiopian Households’ Socioeconomic Survey dataset. The study also uses multiple correspondence analyses for determining relative weights in computing a multidimensional index and conducts a stochastic dominance analysis of distribution of poverty for different population segments. The paper sheds light on the degree of inequalities in consumption expenditure and multidimensional deprivations. In addition, it also compares the degree of poverty using the conventional measure of poverty and the multidimensional approach. It also examines the determinants of household poverty status using both unidimensional and multidimensional measures using the logit model. The results show that the intensity, severity, and depth of poverty varies substantially across the 2 measures. The unidimensional measure of poverty shows that 36 percent of the households were poor as compared to 46 percent multidimensionally poor households. Moreover, demographic, regional, and household heads’ characteristics also affect households’ poverty status.
Highlights
Measuring and analyzing well-being or poverty has involved considerable efforts by academics, policymakers, and social planners
This is followed by a poverty analysis using the Foster, Greer, and Thorbecke (FGT) family for the unidimensional measure
It analyzes tests for different orders of stochastic dominance and sub-group decomposition of poverty. It presents and discusses concise results of inequalities for both unidimensional and multidimensional indicators. It presents the results of the multidimensional poverty measure using the Alkire-Foster methodology and econometric results for identifying the determinants of poverty
Summary
Measuring and analyzing well-being or poverty has involved considerable efforts by academics, policymakers, and social planners. It is found that conventional wisdom about measuring poverty is far removed from households’ realities. This approach defines poverty as scarcity of economic resources or incomes to meet minimum basic needs for a decent life. A resource-based measurement of poverty has been criticized as it fails to show the channels through which poverty manifests itself. It does not unambiguously reveal the true picture of social ills, capabilities, functioning, and income distribution. The other dimensions of deprivations are the disparities among households with different achievements This aspect has attracted research attention which uses several measures of income inequalities.
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