Productivity safety net program, shocks, and rural households asset building in Tigray Region, Ethiopia

This study explores how households in low-income country, without full access to credit and insurance market, built their productive asset in the face of shocks and subsistence constraints to their income. Particularly, it investigates the extent to which the Productive Safety Net Program (PSNP) can be viewed as an effective program for household’s livestock building in the face of shocks and subsistence constraint in Tigray, Ethiopia. Two years of panel data was collected from 15 villages of the region. The panel data was supplemented with a household survey group discussion about the impact of the program. A combination of Propensity score matching and fixed effect estimator are applied to evaluate the impact of the program. I found that the program has positive effects on livestock buildings from both methods, though it is not statically significant in the fixed effect estimator. This is because households are reducing selling their livestock to cover food consumption. Accordingly, PSNP does not cause destocking of livestock assets rather it helps to maintain the existing livestock and filling farm households’ food consumption shortage. When households have own products for consumption, some of the income from PSNP allocates to by livestock’s (sheep, goat and chicken). From our survey, I found that about 19% of the beneficiaries used the income from the PSNP to buy livestock. Besides, the program has a positive correlation with reducing the need to migration in slack season for searching of labor. Thus the program creates an incentive to have more livestock and crowding in effects in households’ labor endowments