Rural Household Poverty and Its Determining Factors: A Poverty Analysis Using Alternative Measurement Approaches

Abstract

In developing countries like Ethiopia, our day-to-day formal and informal discourses are rarely out of poverty issues that can be linked directly or indirectly. Despite the determined effort of government and development agencies to reduce poverty and ensure sustainable development, poverty remains an everlasting challenge in the world. This study aims to examine rural household poverty and its determining factors using alternative poverty measurement approaches, in the case of Gozamin Woreda, East Gojjam Zone of Amhara Region. It used both objective and subjective based poverty analysis approaches, where the survey-based analysis and PPA of the study depend on randomly selected 242 and 42 sample households respectively. Using the cost of basic needs approach (CBN), the poverty line of the study area is estimated as 19.16 Birr per day per adult equivalent. The study engaged Foster, Greer, and Thorbecke (FGT) group of poverty measures to assess the incidence, depth, and intensity of poverty, and decomposition was made across sample Kebeles and socio-economic variables. OLS, logit, and censored (Tobit) regression models were also applied to identify determining factors of household consumption expenditure, poverty incidence, depth, and severity. Accordingly, 35.12 % of the population lives under poverty and it is closely estimated as 33.33% using PPA. Poverty becomes sever challenge in the Dega agro-ecological areas of the Woreda, where 57.37% of the population lives under poverty. Family size and agro-ecological location (from Kolla to Dega) have a significant negative effect on consumption expenditure, but positively affect poverty incidence, gap, and severity. Access to credit service, cooperative services, health extension services, and off-farm activities have a significant positive effect on consumption expenditure; while negatively affect the incidence, depth, and severity of poverty. PPA findings revealed that perception of the community towards poverty is beyond the conventional, income/consumption-based definition. Therefore, development policies and poverty reduction strategies should respond to rapid rural population growth. Moreover, Dega agro-ecological areas need particular attention all the way through poverty reduction efforts.