Poverty and Inequality in Kenya, 1994 -1997: A Stochastic Dominance Approach

Abstract

This study has been motivated by the question of whether it is practical to adopt an alternative approach to poverty analysis that does not rely on the subjective exercise of setting a poverty line in the Kenyan context. This paper focuses on poverty dominance analysis, which uses stochastic dominance to provide rankings of distributions in terms of poverty which are not sensitive to the choice of poverty line. This analysis is carried for Kenya using Welfare Monitoring Survey data for 1994 and 1997 to shed some light on the intertemporal patterns of changes in welfare levels and distribution in Kenya across geographical and socio-economic groupings of policy interest. We find that for a wide range of poverty lines, poverty and inequality increased in Kenya over the period. At the regional levels, Central region enjoys a higher standard of living than other regions while North eastern region is worst hit by poverty .