Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability

Fieldwork for this paper was conducted under the Pastoral Risk Management (PARIMA) project of the Global Livestock Collaborative Research Support Program (GL CRSP), funded by the Office of Agriculture and Food Security, Global Bureau, USAID, under grant number DAN-1328-G-00-0046-00, and analysis was underwritten by the USAID SAGA cooperative agreement, grant number HFM-A-00-01-00132-00. Financial support was also provided by the Social Science Research Council's Program in Applied Economics on Risk and Development (through a grant from the John D. and Catherine T. MacArthur Foundation), The Pew Charitable Trusts (through the Christian Scholars Program of the University of Notre Dame), the Fundação para a Ciência e Tecnologia (Portugal), and the Graduate School of Cornell University. Thanks are due to ILRI - Ethiopia for their hospitality and support and to Action for Development (Yabello) for logistical support. A previous version of some of the results presented here circulated under the title "Safety nets or social insurance in the presence of poverty traps? Evidence from southern Ethiopia". We thank Ed Barbier, Michael Carter, Stefan Dercon, Andrew Foster, Vivian Hoffman, Bob Myers, Dhushyanth Raju, Wally Thurman, Stephen Younger and participants at multiple conferences and seminars for comments that greatly improved that paper. We thank Getachew Gebru and our field assistants, Ahmed Ibrahim and Mohammed Ibrahim, for their invaluable assistance in data collection. The views expressed here are those of the authors and do not represent any agency. Any remaining errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.