Shocks, livestock asset dynamics and social capital in Ethiopia:

This paper uses household survey panel data of 416 rural households to study livestock asset dynamics in the north-east of Ethiopia. The period under examination (1996-2003) was marked by severe environmental shocks, including a series of droughts. Using as point of departure the literature on the evolution of productive assets in the presence of risk, which relates asset paths to initial endowments, we test the hypothesis of wealth divergence and the existence of asset poverty traps. Results indicate rather that livestock asset dynamics are marked by convergence over time. Examining the role of social capital in recovery and growth of households' endowments, both local social relationships as well as ‘bridging' social capital seem to have a positive effect on asset holdings directly, as well as indirectly by mitigating the impact of income shocks on livestock capital.livestock, Household surveys, Environmental disasters, Poverty, assets, Social capital, Droughts,

Social capital and the reproduction of economic inequality in polarized societies

This paper explores the idea of how wealth is distributed across social groups (ethnic or language groups, gender, etc.) and how such distribution fundamentally affects the evolution of economic inequality. By providing microfoundations suitable for this exploration, the paper hopes to enhance the understanding of when social forces contribute to the reproduction of economic inequality. In tackling this issue, the paper offers contributions in two domains. First, it models social capital as a real capital asset with direct use and collateral value. Second, it extends the concepts of identity, alienation and polarization used by Esteban and Ray (1994). This generalization permits consideration of the multiple characteristics that shape social identity, inclusion and exclusion. It also underwrites a higher-order measure of socioeconomic polarization that permits exploration of the hypothesis that economic inequality is most pernicious and persistent when it is socially embedded. Among other things the paper shows that holding constant the initial levels of economic polarization and wealth inequality, higher socioeconomic polarization increases subsequent income and wealth inequality. Far from being a distributionally neutral panacea for missing markets, social capital in this model may itself generate exclusion and deepen social and economic cleavages.Equality ,Social capital ,economic distribution ,

SOCIAL CAPITAL AND THE REPRODUCTION OF INEQUALITY IN SOCIALLY POLARIZED ECONOMIES

This paper explores the idea that how wealth is distributed across social groups (ethnic or language groups, gender, etc.) fundamentally affects the evolution of economic inequality. By providing microfoundations suitable for this exploration, this paper hopes to enhance our understanding of when social forces contribute to the reproduction of economic inequality, and what the relevant policy implications might be. In tackling this issue, this paper offers contributions in two domains. First, it adds a dimension to the literature on social capital. Second, it offers a modest generalization of the concepts of identity, alienation and economic polarization used by Esteban and Ray (1994). This generalization permits us to consider the multiple characteristics that shape social identity, inclusion and exclusion. It also underwrites a higher-order measure of socio-economic polarization that permits us to explore the hypothesis of Frances Stewart and others that economic inequality is most pernicious and persistent when it is socially embedded. Among other things we are able to show that holding constant the initial levels of economic polarization and inequality, increases in socio-economic polarization deepen the reproduction of economic inequality.Institutional and Behavioral Economics,

Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral

In economics, where the long resistance to reflecting on the effects of social interaction on economic behaviour is slowly waning, the concept of social capital may turn out to be a useful analytical tool. However, initial interest in social capital has produced a large variety of definitions, theoretical frameworks, empirical analyses, and even policy prescriptions. This paper provides a selective review and critique of some of the more recent literature on social capital. It then suggests that many of the problems in the existing literature can be addressed by lowering aspirations about what social capital is and reformulating it in terms of its impact on incentive problems in economic transactions in the presence of imperfect markets and costly or non-enforceable contracts. The paper finally advances a model of one of the ways that social capital resolves incentive compatibility problems, namely its role as a collateral assetSocial Capital; Incentive Compatibility; Social Collateral; Credit

Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral

In economics, where the long resistance to reflecting on the effects of social interaction on economic behaviour is slowly waning, the concept of social capital may turn out to be a useful analytical tool. However, initial interest in social capital has produced a large variety of definitions, theoretical frameworks, empirical analyses, and even policy prescriptions. This paper provides a selective review and critique of some of the more recent literature on social capital. It then suggests that many of the problems in the existing literature can be addressed by lowering aspirations about what social capital is and reformulating it in terms of its impact on incentive problems in economic transactions in the presence of imperfect markets and costly or non-enforceable contracts. The paper finally advances a model of one of the ways that social capital resolves incentive compatibility problems, namely its role as a collateral asset.

Access to improved water source and satisfaction with services: Evidence from rural Ethiopia

In recent years access to safe and reliable water supplies has received increased government attention in Ethiopia. As a result, the national coverage rate for this service has gradually improved. Yet millions of people in rural areas still do not get drinking water from an improved water source. While expanding improved water source schemes is generally essential, it is equally important to ensure that the schemes have increased users' satisfaction with water quality and availability for everyday use. Using household survey data and employing univariate and bivariate probit models, this paper attempts to investigate the effect of access to an improved water source on users' satisfaction with both quality and availability of water. The study findings suggest that access to an improved water source significantly raised household satisfaction with both quality and availability of water. However, the effect of the improved water source on users' satisfaction was slightly lower for water availability than for water quality.drinking water, users' satisfaction, bivariate probit,

The bang for the birr: Public expenditures and rural welfare in Ethiopia

Gezahegn Ayele: DCA, EthiopiaPublic investments, Public spending, Rural welfare,

Do external grants to district governments discourage own-revenue generation?: A look at local public finance dynamics in Ghana

Decentralization, Inter-governmental transfers, Local government, Internally generated revenues, Development strategies,

The wealth and gender distribution of rural services in Ethiopia: A public expenditure benefit incidence analysis

agricultural extension, benefit incidence analysis, Development strategies, Food Security Program, water facilities,

Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras

Droughts, hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. The direct impacts can be horrific, but what are the longer-term effects of such shocks on households and their livelihoods? Under what circumstances, and for what types of households, will shocks push households into poverty traps from which recovery is not possible? In an effort to answer these questions, this paper analyzes the asset dynamics of Ethiopian and Honduran households in the wake of severe environmental shocks. While the patterns are different across countries, both reveal worlds in which the poorest households struggle most with shocks, adopting coping strategies which are costly in terms of both short term and long term well-being. There is some evidence that shocks threaten long term poverty traps and that they tend to militate against any tendency of the poor to catch up with wealthier households. Policy implications are discussed in terms of access to markets and the design of government safety net programs.Ethiopia; Honduras; Shocks; Drought; Hurricanes; Assets; Poverty traps; Asset smoothing; Social capital