Government Transfers and Poverty Transition in Metro and Nonmetro Areas: A Survival Analysis

Replaced with revised version of paper 07/28/05.Public Economics,

Can US welfare programs cure persistent poverty?:

"A simple dynamic panel model is used to capture persistence in poverty. This simple model allows a more accurate derivation of the permanent level of the measure of well-being from which persistent poverty is defined. Using a longitudinal dataset from the United States of America, the results show that the variability of the measure of welfare (logarithm of income-to-needs ratio) is mainly driven by transitory shocks through unobservable individual and time-specific characteristics. Consequently, means-tested schemes such as food stamps or the Temporary Assistance to Needy Families (TANF) block grant program can easily miss genuinely eligible welfare clients. The results also suggest that the probability of exiting persistent poverty is much higher for job participants than welfare programs participants. However, compared to their employed counterparts, unemployed individuals have little or no chance of escaping persistent poverty unless they choose to participate in welfare programs." from authors' abstractWelfare economics, Poverty dynamics, Poverty reduction,

Farmers' health status, agricultural efficiency, and poverty in rural Ethiopia: A stochastic production frontier approach

"The A stochastic frontier production function is used to estimate agricultural efficiency index. Then, controlling for household characteristics and other exogenous variables, the efficiency index is regressed on the probability of being sick. Estimation is performed using the treatment effect model where the probability of being sidelined by sickness is modeled as a probit. This framework allows policy simulations that underscore the impact of farmers' health status on both agricultural efficiency and poverty reduction. Overall, regression results confirm the negative impact of health impediment on farmers' agricultural efficiency. Simulation results show that improving farmers' agricultural efficiency by investing in farmers' health may not necessarily lead to poverty reduction. Additional policy instruments may be needed to achieve simultaneous increase in agricultural productivity and reduction in poverty rate." from authors' abstracthealth, Agriculture, productivity, Poverty, Farmers, Efficiency, Stochastic, Production, Science and technology, Institutional change, Innovation,

Farmers’ health and agricultural productivity in rural Ethiopia

This paper estimates a stochastic production using household survey data to analyze the relationship between farmers’ health impediments and agricultural production efficiency in Ethiopia. The results show that healthy farmers produce more per unit of inputs, earn more income and supply more labor than farmers affected by sickness. The model results show that production inefficiency increases significantly with the number of days lost to sickness. This finding suggests that investing in the health sector in rural areas will not only improve farmers’ agricultural performance but also increase their income. Policymakers should therefore devise strategies that will maximize the contribution of health investments to agricultural productivity and the overall rural economy.health, productivity, stochastic frontier, efficiency, Ethiopia, Health Economics and Policy, Productivity Analysis,

How does food price increase affect Ugandan households?: An augmented multimarket approach

"Almost unaffected by the 2008 wave of soaring world food prices, Ugandan local market prices exhibit signs of high price volatility in the first quarter of 2009. At the household level, while net producers may reap some benefits from this increase in food prices, net consumers are more likely to suffer from it. However, the net consumption impact of food price increase is not as straightforward as reported in previous studies. In this paper, we extend Singh et al. (1986) multimarket model by adding demand elasticities from the Almost Ideal Demand System (AIDS). We use the integrated Ugandan National Household Survey (UNHS) 2005/2006 to estimate a measure of net consumption impact that includes both price and profit effects. Overall, we found that household welfare is expected to decrease with loss in consumption and increase with income gain as a result of higher food prices for the cereals producers. Simulating change in cereals consumption induced by a 50 percent increase in cereals price and taking into account the profit effect, our results predict a 23 percent decrease in food consumption for net sellers, compared with 44 percent when using the consumption approach alone. Accounting for such substitution effects, our results suggest that the impact of rising food prices may be mitigated because some households will attempt to substitute more expensive food items with cheaper ones; however, this apparent coping strategy often leads to a much poorer diet. The results suggest that the majority of households with expected positive income impact, the gainers, live in rural areas. These households also tend to have better access to agricultural services than the nongainers." from authors' abstractConsumption, Elasticity, Food prices, households, Multimarket, Science and technology, Institutional change, Innovation systems, Supply and demand, Household resource allocation, Gender,

MODELING SPATIAL ACCESSIBILITY WITHIN DISCRETE CHOICE FRAMEWORK

Spatial accessibility is concerned with the opportunity that an individual at a given location possesses to participate in a particular activity or set of activities. The main objective of this paper is to highlight the shortcomings of traditional accessibility measures and provide some appropriate methodological suggestions for their improvement. Traditional measures derived from cumulative opportunities and gravity models focus on physical proximity leaving out individual and spatial attributes as potential explanatory variable. The improvement through random utility theory relies mainly on Multinomial logit models under Independently and Identically Distributed (IID) and individual response homogeneity assumptions that often do not hold in case of choices involving spatial units. In this paper we briefly present the process of relaxing MNL assumptions. Using the MNL, Nested logit (NL), and Mixed Multinomial logit (MMNL) models we derive related accessibility measures. The application of MNL, NL and MMNL on choice model of residential location underlines possible consequences of a misspecification of the distribution of the error term and that of model parameters. The results clearly suggest that a decision process can be corrupted, and therefore lead to erroneous policy measures because of model misspecification.Research Methods/ Statistical Methods,

Optimal rainfall insurance contracts for maize producers in Ghana’s Northern Region

The risk of food insecurity due to climate change in developing countries has encouraged development partners to seek new approaches to improve the resilience of subsistence agriculture to covariate shocks. Such innovative approaches include investment in safety nets such as rainfall insurance. However, a policy question remains: How does one determine the practicality of rainfall insurance for a particular district? This paper attempts to fill this gap by assessing the viability of rainfall insurance contracts for agricultural production in Ghana’s Northern Region. Using a stop-loss framework, an optimal contract is determined by choosing its parameters by maximizing the objective function in the form of covariance between crop loss and indemnity payment, the objective function given a predetermined fair premium rate. The theoretical contract is implemented using monthly rainfall and annual maize crop yield data from 1998 to 2004 from 12 districts in the Northern Region under varying premium rates. We conclude that rainfall insurance may not be viable for all districts in the Northern Region; however, the contracts are likely to be viable in districts that exhibit a positive Pearson correlation coefficient between maize yield loss and indemnity payments.Climate change, maize yield, rainfall insurance,

Spatial price transmission and market integration in Senegal’s groundnut market

The groundnut sector is the largest of Senegal’s agricultural sectors. It has been subject to various degrees of intervention since the country’s independence. Some, including the determination of farm prices by the government have survived the wave of reforms of the 1980s. Groundnut pricing policies have been the source of major transfers from farmers to the groundnut milling industry, which until 2007, was dominated by SONACOS, a publicly owned parastatal. The state was thus a major beneficiary of the transfers. In 2007, the company was privatized and is now privately owned, raising even greater concerns about the distribution of implications of pricing policies for groundnuts. The paper examines the potential ramifications of liberalizing groundnut prices in terms of its impact on prices received by producers and paid by the milling industry. One fundamental question in the analysis is the extent to which local markets would respond to such a move. To answer this question, the paper presents a dynamic model of price formation that uses estimates of spatial integration across local markets to measure the response of local agricultural prices to policy changes. We then apply this model to simulate the impact of liberalizing groundnut prices to allow domestic prices to reflect their international levels. We find that doing so would change prices in the border city of Dakar, which happens to be the central market that determines prices in the local markets of the producing regions of Kaolack and Fatick. We also find that if markets had been fully liberalized when SONACOS was privatized in January 2007, then groundnut prices would have been higher and that the increase in prices would have been passed on almost entirely to producers in Kaolack and, to a lesser extent, to producers in Fatick. Such reforms would have reversed the longstanding discrimination of groundnut farmers. Prices received by farmers in Kaolack over a period of one year would have increased from 352 FCFA/kg to 494 FCFA/kg of shelled groundnuts. For farmers in the Fatick region, prices would increase from 389 FCFA/kg to 474 FCFA/kg.groundnuts, Liberalization, marketing integration, pricing policies, Privatization,

Impact of soaring food price in Ethiopia: Does location matter?

"Previous studies implicitly assume uniform price-effects across regions or provinces within countries. They also do not address the issue of integration between the world food market and local markets. Instead, they assume a complete transmission of changes in world food prices to local food prices. In this paper, we first establish evidence of regional price heterogeneity across Ethiopia. We also applied the Johansen test for market integration over 95 local maize markets and found that none of the Ethiopian regional markets for maize is integrated to the world market. However, there is significant short-term price effects between the world maize market and some Ethiopian regional markets. Using the Almost Ideal Demand System, we estimate loss in household consumption and calorie intake as induced by food price increases. The results suggest a great deal of heterogeneity across regions as well as between rural and urban areas. Studies that fail to account for the characteristics of household demand across locations are more likely to induce misleading policy recommendations. " from authors' abstractPrice, Integration, Demand, Elasticity, Poverty, Food prices, maize,

Building capacities for evidence and outcome-based food policy planning and implementation

The Comprehensive Africa Agriculture Development Programme (CAADP) is an Africawide framework for revitalizing agriculture and rural development in order to accelerate economic growth and progress toward poverty reduction and food and nutrition security. This study reviews CAADP and its strategic objectives, key players, implementation modalities, and approach to ensuring evidence and outcome-based policy planning and implementation. The study also lays out CAADP’s common analytical framework at the country level and shares economic modeling results from member countries of the Economic Community of West African States (ECOWAS) in which analysis was conducted to examine agricultural growth and investment options for meeting CAADP growth and expenditure targets and the Millennium Development Goal target of halving poverty. Finally, the paper discusses CAADP’s review and dialogue mechanisms and knowledge support systems that have been put in place to facilitate benchmarking, mutual learning, and capacity strengthening that will improve agricultural policy, program design, and implementation.CAADP, ECOWAS, growth options, MDG 1, Poverty reduction, public expenditure,