The dynamics of welfare gains and losses: An African case study

This article uses panel survey data for Côte d'Ivoire to investigate the determinants of welfare gains and losses of households over time. A first‐difference model is estimated which takes account of initial conditions. For urban areas, it was found that human capital is not only a key explanatory factor for levels of welfare, but also the most important endowment to explain welfare changes over time. In rural areas, physical capital, especially land and farm equipment, mattered most. Household size and composition and socioeconomic characteristics of the household also affected welfare changes. Policy implications are discussed.