Determinants of Rural Transient and Chronic Poverty: Evidence from Kenya

1. 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 +254 20 2717818/2717876 Email: muyanga@tegemeo.org Presentation at the Poverty and Economic Policy (PEP) Research Network General Meeting June 19-22 2006, Addis Ababa, Ethiopia

2. Contents • Background • Objectives • Methods and data • Rationale • Results • Policy implications

3. Background • Poverty, 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

4. 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

5. 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)

6. 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

7. 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

8. 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

9. Table 1: 1997-2004 Economic transition matrix

10. Table 2. Poverty decomposition

11. Poverty decomposition (2)

12. Table 3: Chronic and transient poverty by agro regional zones

13. Table 4: Poverty by education level of household head

14. Table 5: Poverty by age of household head

15. Table 6: Poverty by acreage under crop

16. Table 7. Determinants of poverty (Chronic)

17. Table 7. Determinants of poverty (Transient)

18. 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

19. Thanks