Technology, poverty and income distribution nexus: The case of fertilizer adoption in Ethiopia

Abstract

AbstractAdoption of agricultural technology is believed to be the pertinent strategy for poverty alleviation through productivity increment. However, it may simultaneously affect the distribution of income among rural households. This paper, therefore, investigated the poverty and income distribution effect of fertilizer adoption in Northern Western Ethiopia based on the propensity score matching technique and dose–response function. The study indicates that the adoption of fertilizer significantly increases household per adult consumption expenditure by US$53.98–57.89 and reduce incidence of poverty by 17.4%–18.2%. Even though adoption improves the income of households by about US$292.92–374.85, it simultaneously worsens income inequality as measured by both the Lorenz curve and Gini coefficient. Moreover, estimates of the dose–response functions indicate that annual income and consumption expenditure of farm households increase with the intensity of fertilizer adoption. On the other hand, the incidence of poverty was found to be reduced when intensity of fertilizer utilization increases. The results imply that technology adoption worsens income distribution by increasing the income of large and medium farmers more proportionately compared to small farmers. Hence, further efforts should be exerted to achieve balanced adoption of fertilizer for the betterment of the welfare of the society.