Poverty and Inequality in Ethiopia, 1995/6–2015/16

This chapter looks at trends in poverty and inequality at national and regional levels in Ethiopia during the period 1995/6–2015/16. The data indicate that poverty in Ethiopia has shown a substantial decline over this period, with the share of population living under the national absolute poverty line reduced from almost one in two Ethiopians in 1995/6 to about one in four in 2015/16. Results from growth–inequality poverty decomposition indicate that the declines in the absolute poverty rates are accounted for by changes in the rate of economic growth rather than by distribution of wealth. While Ethiopia still has a low level of income inequality, the upward trend in the Gini coefficient from 0.29 in 1995/6 to almost 0.33 in 2015/16 may constrain the scope for further poverty reduction, suggesting a need for policies that consider growth and redistribution at the same time.