Growth, Poverty, and Distribution in Ethiopia

The Ethiopian economy has maintained a rate of growth in output per worker for twenty years, averaging 6 per cent in real terms. As a result, per capita GDP during this period has doubled, the poverty rate has declined, and productivity in agriculture has improved. However, the country still grapples with rising youth unemployment and widespread poverty mediated by rapid population growth. This chapter examines the interactions between growth, poverty, and inequality by examining features of the Ethiopian labour market. The dynamics of poverty are discussed from the perspective of stylized facts on its components, including the persistence of poverty over time and the role of initial conditions in facilitating or impeding poverty reduction. The chapter investigates the potential role of changes in the sectoral share of employment on poverty and inequality under various policy settings.