THE ROLE OF SCHOOLING IN THE ALLEVIATION OF RURAL POVERTY IN ETHIOPIA

The impact of education on farmers' choice of activities and household welfare are modelled and estimated using farm household data for rural Ethiopia. We find that education has significant effects on household welfare. Schooling increases the adoption of new technologies and facilitates entry into highly profitable farm and non-farm activities, all of which may increase welfare and help farm households escape out of income poverty. An additional year of schooling in a household increases the welfare by 8.5 percent. These findings provide a rationale to governments and donor organisations to include the expansion of rural schooling (through encouragement of parents to send their children to school) in their policy reform as a means of reducing material deprivation.Education, welfare, poverty and rural Ethiopia, Food Security and Poverty, Labor and Human Capital,

Financial access to micro and small enterprise operators: the case of youth-owned firms in Ethiopia

The government of Ethiopia has been providing financial access to micro and small enterprises through microfinance institutions. Despite the financial services support given to MSEs, lack of access to finance remains the main business challenge limiting the expansion of the self-employment sector in Ethiopia. This paper aims to study what financial sources are available to MSE operators and examine what factors drive access to credit. Quantitative information was collected from a sample of 909 youth MSE operators and a descriptive and econometric model was applied to examine sources of finance, factors influencing access to loan, and constraints of accessing financial services. Only very few operators (about 8.7%) used borrowing from the formal sector as a source of funding their investment. The result of the study shows that inadequate collateral and difficulties in proving their credit worthiness or absence of credit history were by far the main reasons that discouraged youth MSE operators from submitting applications for bank loans, followed by difficulties in processing loans and the high cost of borrowing. The regression results indicate that age, type of enterprise, and possession of a business plan by the youth MSE owners are significant variables influencing the likelihood of taking a loan. In other words, as age increases, the probability of the MSE operator to take a loan tends to increase. Type of enterprise was found to have a negative effect, indicating that operators in microenterprises have lower probability of taking credits than those engaged in small enterprises. The finding of the study also reveals that the age of the owner, the type of the enterprise, migration status, the location of the business, and the presence of a business plan were statistically significant variables influencing the size of credit accessed by the operators. There is a need for a deliberate intervention and a tailored support program by government and development partners, on the basis of size and gender, to improve financial access to the youth MSE operators without distorting the financial market and ensuring the sustainability of the finance providers.Key words: Youth owned firms, MSE financing, EthiopiaJEL Classification: L0, L1, L5, L

Are Farmers Completely Rational Consumers and Do They Suffer from a Borrowing Constraint? The Dutch Case

There is some confusion in the literature on the consumption behaviour of farmers. We try to clear up some of the issues surrounding this confusion by elaborating and testing a model. Euler equations have been derived from a constant relative risk aversion utility function for total consumption expenditure, household expenditure and other expenditure, which includes durable goods. According to a test of Euler equations, farm households are not simply optimising lifetime utility. Rather, these households follow simple consumption rules, strongly influenced by habit formation. In line with most of the literature, we find that farm households are not borrowing constrained in their consumption expenditures.consumption, Euler equation, borrowing constraint, Dutch farm households, Farm Management,

Growth and chronic poverty: Evidence from rural communities in Ethiopia

What keeps some people persistently poor, even in the context of relative high growth? In this paper, we explore this question using a 15-year longitudinal data set from Ethiopia. We compare the findings of an empirical growth model with those derived from a model of the determinants of chronic poverty. We ask whether the chronically poor are simply not benefiting in the same way from the same factors that allowed others to escape poverty, or whether there are latent factors that leave them behind? We find that this chronic poverty is associated with several initial characteristics: lack of physical assets, education, and ‘remoteness’ in terms of distance to towns or poor roads. The chronically poor appear to benefit from some of the drivers of growth, such as better roads or extension services in much the same way that the non-chronically poor benefit. However, they appear to have lower growth in this period, related to time-invariant characteristics, and this suggests that they face a considerable growth and standard of living handicap.

Children's Educational Completion Rates and Dropouts in the Context of Ethiopia's National Poverty Reduction Strategy

A combination of quantitative and qualitative method was used to analyse the determinants of school completion/dropout of children from primary education. A Cox box proportional hazard model was used analyse the survival of children in primary education. The findings have important implications for the formulation and revising Ethiopian Poverty Reduction Strategy Paper. While the policy focus of the 1996-initiated ESDP and the SDPRP (2002-5) on increasing educational access for all has been broadly successful, children from poor and/or highly indebted families still face significant constraints because they have to contribute to household survival through paid and unpaid work. It is therefore imperative to increase efforts to improve the livelihood options of the poor, including greater income generation opportunities, particularly in rural areas and for women. However, such strategies need to be child sensitive. For instance, income generating opportunities for women should simultaneously be accompanied by community childcare systems in order to prevent older children from shouldering their mother's childcare burden.education, children, Ethiopia, PRSP, poverty, survival analysis, Labor and Human Capital, A2, D1, J2,

Insurance motives to remit: Evidence from a matched sample of Ethiopian internal migrants

Migration and remittances can be used by rural households as a means of insurance, investment, and income augmentation. Ample attention has been given to studying international remittance flows, since for many countries such transfers comprise a significant fraction of income. Remittance flows from internal migrants are relatively understudied, particularly in Africa, where remittance rates are poor. We use a unique matched migrant sample to study what drives the low remittance rates in Ethiopia. Descriptive statistics suggest remitters are positively selected in terms of wealth characteristics compared with the average tracked migrant. Limited skill transferability and liquidity largely explain low remittance rates in Ethiopia. Weaker evidence suggests migrants are additionally motivated to remit as a form of self-insurance against own shocks to income and investments towards future inheritable assets.Insurance, Migration, Remittances,

The effect of early childhood stunting on children’s cognitive achievements: Evidence from young lives Ethiopia

Background: There is little empirical evidence on the effect of childhood malnutrition on children’s cognitive achievements in low income countries like Ethiopia. A longitudinal data is thus vital to understand the factors that influence cognitive development of children over time, particularly how early childhood stunting affects cognitive achievement of children up to the age of 8 years.Objective: To examine the effect of early childhood stunting on cognitive achievements of children using longitudinal data that incorporate anthropometric measurements and results of cognitive achievement tests such as Peabody Picture Vocabulary Test and Cognitive Development Assessment quantitative tests.Method: Defining stunted children as those having a standardized height for age z-score less than -2; we used a Propensity Score Matching (PSM) to examine the effect of early childhood stunting on measures of cognitive performance of children. The balance of the propensity score matching techniques was checked and found to be satisfied (P<0.01)Results: Early childhood stunting is significantly negatively associated with cognitive performance of children. Controlled for confounding variables such as length of breastfeeding, relative size of the child at birth, health problems of early childhood such as acute respiratory illness and malaria, baseline household wealth, child gender, household size and parental education, estimates from PSM show that stunted children scored 16.1% less in the Peabody Picture Vocabulary Test and 48.8% less in the Quantitative Assessment test at the age of eight, both statistically significant at P<0.01.Conclusions: It is important to realize the importance of early investment in terms of child health and nutrition until five years for the cognitive performance of children. As household wealth and parental education are particularly found to play an important role in children’s nutritional achievements, policy measures that are directed in improving household’s livelihood may have a spill-over impact in improving child nutritional status, and consequently cognitive development and schooling. [Ethiop. J. Health Dev. 2017;31(2):75-84]Keywords: Early childhood, stunting, cognitive achievements, Ethiopi

Understanding the impact of large-scale educational reform on students’ learning outcomes in Ethiopia: the GEQIP-II case

The Ethiopian education system has been very dynamic over recent years, with a series of large-scale education program interventions, such as the Second Phase of General Education Quality Improvement Project (GEQIP-II) that aimed to improve student learning outcomes. Despite the large-scale programs, empirical studies assessing how such interventions have worked and who benefited from the reforms are limited. This study aims to understand the impact of the reform on Grade 4 students’ maths learning outcomes over a school year using two comparable Grade 4 cohort students from 33 common schools in the Young Lives (YL, 2012-13) and RISE (2018-19) surveys. We employ matching techniques to estimate the effects of the reform by accounting for baseline observable characteristics of the two cohorts matched within the same schools. Results show that the RISE cohort started the school year with a lower average test score than the YL cohort. At the start of Grade 4, the Average Treatment Effect on the Treated (ATT) is lower by 0.36 SD (p<0.01). In terms of learning gain over the school year, however, the RISE cohort has shown a modestly higher value-added than the YL cohort, with ATT of 0.074 SD (p<0.05). The learning gain particularly is higher for students in rural schools (0.125 SD & p<0.05), which is also stronger among rural boys (0.184 SD & p<0.05) than among rural girls. We consider the implications of our results from a system dynamic perspective; in that the GEQIP-II reform induced unprecedented access to primary education, where the national Net Enrolment Rate (NER) rose from 85.7 percent in 2012-13 to 95.3 percent in 2019-20, which is equivalent to nearly 3 million additional learners to the primary education at a national level. This shows that learning levels have not increased in tandem with enrolment, and the unprecedented access for nearly all children might create pressure on the school system. Current policy efforts should therefore focus on sustaining learning gains for all children while creating better access