Origins of Rural Poverty in Sri Lanka: An Empirical Model

Abstract

Paper presented on International Research Conference on Knowledge for Growth and Development, held in Sri Lanka (2007) ORIGINS OF RURAL POVERTY IN SRI LANKA: AN EMPIRICAL MODEL Siriwardhane Dinesha Department of Business Economics University of Sri Jayewardenepura Gangodawila Nugegoda Sri Lanka Amaratunge Sampath Department of Business Economics University of Sri Jayewardenepura Gangodawila Nugegoda Sri Lanka Abstract The objective of this study is to reveal the causes of poverty at an extensive level in the rural sector of Sri Lanka. Eleven hypotheses were developed and tested in order to accomplish the objective. The hypotheses were examined by using data collected from the field study. Primary cross sectional data was collected by employing the case study method. Primary data was analyzed by developing an ordinal logistic regression model. In the ordinal logistic regression model poverty was taken as the dependent variable and was considered as an ordinal variable considering whether the household is ultra poor, poor or non poor. Poverty was measured by using per capita consumption expenditure based on the official poverty line of the country. The results of the goodness of fitness tests reveal that the model adequately fits the sampling data to represent the population and the predictive power of the model is at an acceptable level. Econometric tests and revealed that the level of income, industrial sector occupation, age, size of household, consumption of liquor and remoteness of households make significant impact on the level of poverty. From them, age of the head of the household and the level of income of the household make a negative impact on the level of poverty while the size of the household, consumption of liquor, remoteness and the industrial sector occupation make a positive impact. Model results do not show enough evidence to identify the size of land owned by the household, level of education, gender, smoking and the agricultural sector occupation of the head of the household as causes of poverty in the rural sector.