LAUSR

Abstract Enhancing resilience capacity holds the key to curbing multidimensional poverty. The empirics are limited to ascertain the linkages between resilience and multidimensional poverty and implications for policy uptake in Ethiopia. This study addresses the role of household resilience capacity on multidimensional poverty reduction using the Ethiopian Socioeconomic Survey data collected by the Central Statistical Agency in collaboration with the World Bank Living Standard Measurement Study (2011/12 - 15/16). The study finds a steady decline in poverty as a response to slight increases in resilience capacity. However, there has been an uneven observation, with gains in the most populated and regions where poverty was highest earlier. The major pillars in explaining resilience are adaptive capacity, income and food access, and stability. The fixed effect estimate indicated that building resilience capacity, commercialization, literacy, saving, wage labor participation, and having more economically active members can open up opportunities and enable sustained pathways out of multidimensional deprivation. The dynamic random effect probit model, on the other hand, confirmed the existence of strong state dependence in multidimensional poverty in rural Ethiopia. As part of sustainable resilience for multidimensional poverty solutions, improving the performance of small farmers through improving access to land and agricultural inputs, investment in small-scale irrigation, sustainable intensification, and crop diversification play significant roles, even if but not sufficient on their own. Findings, therefore, suggest that the government policies aimed at enhancing resilience for multidimensional poverty should adopt productive inclusion and rural transformation approaches. Public investments in infrastructure, support for migration, making urban development migrant-friendly, promoting the rural non-farm sector, ensuring sustainable financial inclusion of the poor, improving market access, commercialization, diversification of income and livelihood, and increasing access to basic services should also be part of the strategy. This implies that urbanization and rural livelihood transition deserve much more attention when striving for sustainable poverty reduction. Lastly, public investments on infrastructure, expansion of semi-formal financial institutions and public expenditures to support early warning systems, safety nets, and humanitarian emergencies plays a key role in strengthening the capacity of a multidimensionally poor and vulnerable population to resist, absorb, adapt to, and recover from the effects of shocks.