Though income dynamics studies are common in developed world (Jenkins,
2000), very few have been carried out in developing countries, especially rural Africa
where poverty is immense. The main limitation has been paucity of relevant panel data in
this region. The few existing studies have been carried out in Ivory Coast (using the Cote
d'Ivoire Living Standards Survey (CILSS)) and South Africa (based on the Kwazulu-
Natal Income Dynamics Study (KIDS) panel data set). Specific studies in Africa that
have used income include Gunning et al. (2000), Fields et al (2003a, 2003b) and Woolard
and Klasen (2005). Baulch and Hoddinott (2000) provide a detailed review of other
earlier studies in developing countries.
Empirical studies on poverty dynamics in Kenya have mainly focused on
analyzing poverty transitions and/or determinants of poverty status, thus utilizing discrete
measures of poverty. While an understanding of factors associated with movements into
and out of poverty has great value in the design of safety net policies, in the long run,
design of policies that promote equitable growth requires information of how and why
households increase their well-being relative to others (Baulch and Hoddinott, 2000). It is
also important to note that use of transitions provide only relative rankings and
potentially ignore the life-cycle phenomenon. A more recent study by Burke et al. (2007)
explores movement into and out of poverty using an asset based measure with special
reference to the importance of livestock. The current study adds to the existing literature
by carrying out an in depth analysis of economic mobility using income as a continuous
variable, thus utilizing much of the available information, some of which is usually
masked when using discrete poverty measures.