1. Determinants of Rural Transient and Chronic Poverty: Evidence from Kenya Determinants of Rural Transient and Chronic Poverty: Evidence from Kenya Milu Muyanga, Miltone Ayieko and Mary Kwamboka Tegemeo Institute of Agricultural Policy and Development Egerton University (Kenya) P.O Box 20498, 0200 Nairobi Tel +254 20 2717818/2717876 Email: muyanga@tegemeo.org Presentation at the Poverty and Economic Policy (PEP) Research Network General Meeting June 19-22 2006, Addis Ababa, Ethiopia

2. Contents Background Objectives Methods and data Rationale Results Policy implications

3. Background Poverty, disease and ignorance were identified as major problems at independence Policy been geared towards addressing these challenges Country’s economic performance has been low High poverty incidences have been witnessed ¾ poor live in the rural areas Pockets of high poverty in some regions with poverty below the national average

4. Background (2) Non-income indicators worsened High illiteracy rates Life expectancy declined Infant and child mortality worsened Stunted children increased Vaccination levels low Gender disparities have persisted

5. Background (3) Government Response National Poverty Eradication Plan (NPEP) Poverty Reduction Strategy Paper (PRSP)  Consultative  Medium Term Expenditure Framework (MTEF) Economic Recovery Strategy for Wealth Employment Creation (ERSWEC) United Nations endorsed Millennium Development Goals (MDGs)

6. Objectives 1. Examine rural poverty dynamics 2. Decompose household total poverty into chronic and transient poverty components 3. Establish correlates to chronic, transient and total poverty 4. Draw policy lessons

7. Rationale High poverty incidences have created a desire for empirical studies Most earlier studies of poverty have been static in nature Determinants of chronic poverty are likely to be different from those of transient poverty So are the appropriate respective policy responses

8. Methods and Data Poverty dynamics: economic transition matrices Examine movements across poverty lines Poverty decomposition Jalan and Ravallion approach Equally Distributed Equivalent (EDE) poverty gaps approach Corrected for statistical biases Determinants of poverty components correlates Regress total, chronic and transient poverty on a set of a common household characteristics Use censored quantile regression model Data: Tegemeo/MSU panel data (1997, 2000 and 2004) Income is welfare measure Deflated Equivalence scales used

9. Table 1: 1997-2004 Economic transition matrix

10. Table 2. Poverty decomposition

11. Poverty decomposition (2)

12. Table 3: Chronic and transient poverty by agro regional zones

13. Table 4: Poverty by education level of household head

14. Table 5: Poverty by age of household head

15. Table 6: Poverty by acreage under crop

16. Table 7. Determinants of poverty (Chronic)

17. Table 7. Determinants of poverty (Transient)

18. Policy implications There has been significant movements in and out of poverty Chronic poverty dominates transient poverty Targeting Large households Headed by females Regions High dependency ratio Policy variables Education Diversification of income and crops grown Physical assets stock Cultivated land acreage

19. Thanks