Social Protection Programmes, Asset Dynamics and Distributional Effects: Evidence from Ethiopia’s Productive Safety Nets Programme

1. ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Social Protection Programmes, Asset Dynamics and
Distributional Effects:
Evidence from Ethiopia’s Productive Safety Nets Programme
Guush Berhane - IFPRI -ESSP
Mehari Hiluf Abay - IFPRI -ESSP
Ethiopian EconomicsAssociation (EEA)
13th International Conference on the Ethiopian Economy
July 23 - 25, 2015
1

2. Outline
• Introduction
• Research questions
• Data and Method
• Descriptive results
• Estimation results (very preliminary)
• Concluding remarks
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3. Introduction
3
• Ethiopia’s PSNP is large social protection programme established in
2005.
• Primary objective of PSNP includes :
• Improving food security of the poorest households
• Protecting assets of the poorest households
• Safeguarding these households from further sliding down into
extreme poverty aftershocks hit

4. Introduction
• Successive evaluative studies of the programme find consistent
positive effects on household food security over the PSNP operation
years.
• For example, according to Berhane et al 2014 , PSNP increased food
security by 1.29 month, equivalent to reducing the length of the hungry
season by one-third.
• However, the same studies did not establish similar consistent effects
on asset holdings (livestock assets measured in tropical livestock
units (TLU).
• The PSNP causally improved asset holdings in earlier years (2006-2010) but
the effect was not detected in later years.
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5. Introduction
• Although it is understudied, there are some expected reasons not to
detect this impact.
I. Distributional impact of PSNP
• Estimation of average (mean) treatment effect of the PSNP on asset
holding may fail to show causal impacts because the impact may
vary over quantile of the conditional distribution of asset wealth.
II. Dynamics in asset holding
• It is possible that there is insurance motive behind rural household
asset holding, for example, livestock holding.
• PSNP as insurance may well play into the livestock holding
dynamics as follow.
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6. • Evidences show that the PSNP transfer levels has become more
frequent and predictable over the years.
• Households may have responded to the increasingly higher and
predictable transfer levels by saving less on assets.
III. Emerging income generation motive of livestock holding
• Farmers may be moving away from increasing quantity of animals
as a stock of wealth in to using animals as a source of income, for
example, shift to highbred and quality animals.
• The income generation motive of livestock holding become more
important than the savings motive (in which case quantity of
livestock is traded for quality)
Introduction
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7. Introduction
• The objective of this study is therefore to examine the
distributional impacts of the PSNP on livestock as well as other
productive asset holdings, and understand the dynamics therein.
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8. Research questions
We investigate the following three questions:
1. Does the impact of PSNP on asset holding distribute differently
across different groups of farmers in terms of wealth?
2. Do PSNP transfers play a role in farmers income generation from
livestock product?
3. Are there differences in income generation from livestock product
across wealth levels?
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9. II. Data and Method
• Our analysis is based on five round longitudinal survey data
collected on PSNP between 2006 and 2014.
• These data were collected from the four major regions covered by
the PSNP (Tigray, Amhara, Oromiya, and SNNPR)
• The sample was constructed by randomly sampling woredas
proportional to size from a list of chronically food-insecure
woredas stratified by region where the PSNP was operating in
2006.
• Within each woreda, enumeration areas (EAs) were randomly
selected from kebeles where the PSNP was operating.
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10. • Within each EA, 15 beneficiary and 10 non-beneficiary
households were sampled from separate lists for each group,
yielding a sample of 25 households per EA.
• This study uses 2, 799 balanced sample households interviewed
across all 5 rounds.
Data
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11. Method
• Examining the distributional impacts of PSNP across different asset
levels is challenging because it needs a methodology that estimates
the effects over time and is able to control for unobserved
heterogeneity.
• To examine the distributional impact of PSNP across different asset
levels, we implement panel data quantile regression procedure
following Abrevaya and Dahl (2005) .
• Alternatively, we conduct our analysis by separating the sample in to
asset wealth terciles (Tercile 1 “poorest”, Tercile 2, and Tercile 3
“richest” households ).
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12. 12
• To asses that the relatively poor and rich group benefits differently
from PSNP, we separately run a generalized instrumental variables
(GIV) estimation model on the poorest and richest terciles.
• Similarly, to examine the effect of PSNP on income generation
from livestock product we estimate probit model by interacting
PSNP with wealth tercile group of the holuseholds.
Method

13. Descriptive results
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0.01.02.03.04.05.06.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
year
Beneficiaries
Non-Beneficiaries
Trends in livestock holding 2006-2014, by PSNP beneficiary status

14. Descriptive results
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0.00.51.01.52.02.5
2006
2007
2008
2009
2010
2011
2012
2013
2014
year
Beneficiaries
Non-Beneficiaries
Poorest households
0.02.04.06.08.0
10.012.0
TropicalLivestockUnits
2006
2007
2008
2009
2010
2011
2012
2013
2014
year
Beneficiaries
Non-Beneficiaries
Richest households
Trends in livestock holding for the poorest and richest terciles 2006-2014, by
PSNP beneficiary status

15. Descriptive results
15
0
.005
.01
.015
.02
.025
.03
.035
.04
2006
2008
2010
2012
2014
year
Beneficiaries Non-beneficiaries
Trends in crossbreed livestock holding 2006-2014, by PSNP
beneficiary status

16. Preliminary estimation results
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Distributional impact of receipt of PW payments on livestock holding
Panel quantile estimates: Dependent variable: Livestock holdings, TLU
Quantiles
Size of
impact
Standard
Error t statistic Interpretation
0.15 0.129** 0.057 2.26 The impact is significant and positive
only at the 15% quantile. The impact
is focused primarily among the very
poor beneficiaries with 0.13 TLU.
0.25 .101 .064 1.56
0.50 .028 .085 0.33
0.75 .103 .138 0.75
0.85 .007 .179 0.04
Notes: ** statistically significant at the 5 percent level.

17. 17
Generalized Instrumental Variables estimation (GIV) results
Dependent variable: Livestock holdings, TLU
Group
Size of
impact
Standard
Error z statistic Interpretation
Poorest tercile .006*** .0015 3.67 The PSNP increases TLU by 0.006.
The impact is statistically significant
Richest tercile -.011 .0086 -1.27 The PSNP has no impact on this
group
Notes: *** statistically significant at the 1 percent level.
Preliminary estimation results

18. 18
Preliminary estimation results
Impact of PW payment on income generation from livestock product. Probit model results:
Dependent variable: dummy of generating income from Livestock products
Size of impact
Standard
Error z statistic Interpretation
PSNP .547*** .044 12.35 The PSNP increases the likelihood that
beneficiaries generate income from livestock
products for sale by 5 percentage points. This
impact is statistically significant.
Richest tercile .525 *** .038 13.95 Households in the richest tercile have 5
percentage point higher likelihood to generate
income from livestock product comparing to
the lower terciles. This impact is statistically
significant.
Notes: *** statistically significant at the 1 percent level.

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Concluding remarks
• PSNP has significant positive impacts on livestock asset holdings
of the relatively poorest (and more so on the poorest 15th
percentile of the sample) households.
• The results, although they are preliminary, indicate that PSNP
primarily benefits the relatively poorest households suggesting
that impacts of social protection programs may not be wealth
neutral even within the eligible household groups

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Concluding remarks
• Households that received Public Works payments more likely to
generate income from livestock products as compared to
households that did not receive any Public Works transfers.
• Further our results suggest that this income generation is also
wealth dependent, the relatively wealthier households are more
likely to shift from the traditional asset holding motive (using
livestock as insurance as well as wealth accumulation) to
livestock holding as means of income generation.

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Thank you!