To Specialize or Diversify: Agricultural Diversity and Poverty Persistence in Ethiopia
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This article answers the empirical question: what is the relationship between the choice
to specialize or diversify in crop production and household poverty status? We use
household panel data from Ethiopia and a recently developed parametric method for
estimating dynamic binary response models with endogenous contemporaneous regres-
sors. Our results provide evidence that households which grow a diverse set of crops are
less likely to be poor. Additionally, crop diversity reduces the probability that a house-
hold will fall into poverty and reduces the probability that a household will remain in
poverty. We conclude that policies which encourage households to specialize in cash
crops may be counter-productive while policies which encourage crop diversification
may reduce poverty.