Paving the way out of destitution: Does resilience capacity matter? Panel data evidence from rural Ethiopia

Abstract

This paper examines the effect of shocks on destitution, vulnerability to destitution, and its dynamics and how resilience mediates the relationship between shocks and destitution based on three waves of the Ethiopian Socioeconomic Survey and applying econometric models. Alkire and Foster's intensity approach and the Resilience Index Measurement and Analysis approach were employed to compute the destitution and resilience indices. The findings show that destitution and households vulnerable to becoming destitute have increased over time due to concurrent and recurrent exposure to shocks. The result also reveals that the distribution of the destitute exhibits a distinct spatial heterogeneity among regions more vulnerable, tending to have many destitute. We also find a genuine state dependence on destitution. Therefore, a destitute in the preceding year is more likely to be destitute in the subsequent years. The econometric results confirm that enhancing the rural non-farm economy and investing in irrigation, market, and road infrastructure have a role in reducing destitution. However, shocks, land fragmentation, loans, female headship, and dependency ratio put households at the most significant risk of destitution. Results also show that commercialization and literacy reduce destitution. Building resilience capacity also emerged as the vital mediator in escaping destitution in the presence of shocks. The spatial disparity highlights the need for strategies designed using a territorial approach. Critical for policy uptake, the findings suggest putting in place coherent preemptive and redemptive policies to have a far-reaching impact on reducing destitution and vulnerability.

Keywords

• Shocks
• Destitution
• Dynamic random effect probit
• Panel data
• Rural Ethiopia