Household Poverty in Egypt: Poverty Profile, Econometric Modeling and Policy Simulations

Recognizing and understanding the roots of poverty, its elements and determinants in Egypt is vital to coming up with policy recommendations that help eradicate poverty and ameliorate welfare. As a developing country, Egypt has been suffering from increasing poverty rates since year 2000. In this study, the three most recent Egyptian Households Income, Expenditure and Consumption Surveys conducted by the Central Agency for Public Mobilization and Statistics for the years 2011, 2013 and 2015 are utilized to analyze and model the determinants of poverty in Egypt. A comprehensive poverty profile is constructed for the three years, as well as a comparison for the changes that have occurred over time on the national, rural and urban levels. Some determinants were selected as the most important factors affecting poverty, such as: demographic characteristics, employment status and educational attainment. Additionally, two econometric techniques are employed to model the different factors affecting households’ consumption as well as probability of falling in poverty in Egypt; namely, Fixed Effects Regression and Logistic Regression. The results of the poverty profile, as well as both models, illustrate that the main variables which help reduce poverty are: having low family size, high number of earners and better educational attainment. On the other hand, factors that worsen poverty status of households are working in agriculture and construction sectors, depending on pension as the main source of income in addition to having high dependency ratio. Furthermore, poverty simulation analyses are conducted to assess the effect of changes in the levels of determinants of poverty on probability of being poor to show the possible consequences and effects of potential poverty lessening policies and plans.