Discussion Paper No. 33 of 2004 on Poverty and Employment in Kenya

Abstract

At the time of independence in 1963, the Government of Kenya identified illiteracy, disease, ignorance and poverty as the main problems to be addressed in the post-independence era. In spite of the antipoverty measures implemented since independence, 56 percent of the Kenyan population today remains poor. Further, despite the numerous studies on poverty measurement and profiles in Kenya, little is known about the relationship between poverty and employment. This paper analyses poverty profiles among the employed using household data collected by the Government of Kenya in 1994 and recommends a new strategy for poverty reduction. The findings of the study show that employment in the agricultural and informal sectors is associated with a higher than average probability of being poor. Households engage in subsistence farming and off-farm informal activities primarily to cope with, rather than escape poverty. In common with previous studies, we find a strong negative correlation between schooling and poverty, which supports the current government policy of free primary schooling as an instrument for poverty reduction. We find that although poverty prevalence is insensitive to employment in agricultural and informal sectors, employment in these sectors reduces the depth and severity of poverty. The policy implication of this finding is briefly discussed.