Factors associated with farm households' movement into and out of poverty in Kenya: The rising importance of livestock

Abstract

This study explores the dynamics of poverty in Kenya. The study specifically examines how initial conditions, household decisions, and other factors that may change over time affect poverty. Dynamic relationships are identified between behavioral variables, exogenous shocks at one point in time, and indicators of household welfare in subsequent years. The study uses longitudinal data collected from 1,324 households which participated in three nationwide surveys conducted over seven years, in 1997, 2000, and 2004, to identify salient household-level and community-level correlates of poverty in rural Kenya. Next, dynamic relationships are identified between time-invariant initial conditions, lagged household resource allocation, technology adoption decisions, and current income and wealth outcomes. Last, the paper draws implications for designing policies and programs for alleviating rural poverty and promoting income growth.