Multidimensional Poverty and Inequality in Urban Ethiopia

Poverty reduction and ensuring fair distribution of resources have been among the core agenda of the Ethiopian government for decades. This study estimates the extents of urban monetary and multidimensional poverty and inequality at national and regional levels. The multidimensional poverty and inequality indices estimated constitute indicators grouped under four dimensions–education, health, living standards and monetary poverty. Associations to the micro-, community- and macro-level factors are made using simple simulations and econometric models. Data primarily come from ESS 2015/16. Results reveal large prevalence of food and nonfood poverty coupled with nonmonetary deprivations in housing and cooking fuels. Monetary poverty rates of incidence, gap and severity in 2015/16 are found to be higher than the official figures. Multidimensional poverty in urban Ethiopia is one of the highest, with more than half of it coming from monetary poverty followed by deprivations in living standards, health and education. Despite smaller values of multidimensional inequality index and inequality among the multidimensionally poor, disparities among regions exist. Deprivations, poverty and inequality seem to fall with urbanization and national rates are generally found to mask disparities among population groups. Besides demographic and geographic factors, receiving remittance, access to credit, availability of microfinance institutions and primary schools at community-level, and food price shocks are among the factors that are associated with various indicators of household welfare. Policy options include provision of basic public services, promoting access to microcredit, installment of fair distribution/redistribution systems and use of multidimensional approach to welfare measurement by the government.