distribution, the increasing and then decreasing gender inequality is mainly driven by the structural effect.

The remainder of the paper is organized as follows: _Section 2_ provides brief context information about Ethiopia; _Section 3_ describes the data set employed; _Section 4_ details the decomposition methods employed in the empirical estimations; _Section 5_ presents the results; _Section 6_ performs some robustness checks; and finally, _Section 7_ concludes.

# **2 The Ethiopian context and recent agricultural development**<sup>6</sup>

Ethiopia is Africa’s second most populated country with 85 million inhabitants distributed along a 1 million square kilometers land-locked area. Its economy is highly dependent on agriculture. The most recent figures indicate that agriculture contributes 46.3 percent to Ethiopia's Gross Domestic Product (GDP) and that around 82.9 percent of the population lives in rural areas. Last decade's growing trends in crop production and yields<sup>7</sup> provide a hopeful message to the more than 30 percent of rural population living below the national poverty line (see Figure A.1).

Ethiopia’s agriculture is complex since it involves substantial variations in crops grown across the country’s different regions and ecologies (Taffesse et al. 2012). In Ethiopia there is no single main staple crop, instead five cereals dominate production: teff,<sup>8</sup> wheat, maize, sorghum and barley, which account for about three-quarters of total cultivated area,<sup>9</sup> and 29 percent of agricultural GDP. After cereals, pulse and oilseed are the second and third most cultivated crop groups. Coffee is the major cash and export crop, accounting for 3.8 percent of GDP and only 2.7 percent of total area cultivated.

The majority of farmers consists of smallholder peasants and produces mostly cereals for selfconsumption. Access to irrigation, modern technologies, and inputs is limited. By 2007-2008, smallholder farmers cultivated 12 million hectares of land, which represents 96.3 percent of the total cultivated area (Taffesse et al. 2012). Even though there have been recent improvements, poverty alleviation and food security are still key challenges. By 2011, the population living on less than $1.25 and $2.00 dollars per day was 30.6 and 66 percent, respectively. Child malnutrition in 2011, measured as the percentage of children under age 5, remains high, at 29.2 percent. Enhancing sustained increases in agriculture productivity, and promoting gender equality<sup>10</sup> may be the next step for further poverty alleviation and food security attainment, especially for rural Ethiopian households.

> 6 Unless otherwise stated, the statistics reported were obtained from http://data.worldbank.org/country/ethiopia 7 Taffesse et al. (2012) documented that the increase of production in the past decade has been mostly due to increases in the area cultivated. Cereal yields have increased at an average rate of 4 percent during the last decade. Still, yield levels are low compared to international standards.

> 8 Teff is an indigenous crop widely grown only in Ethiopia and Eritrea.

> 9 Between 2004/05 – 2007/08, on average, teff accounted for 29 percent, maize 21 percent, sorghum and wheat 19 percent, each, and barley 12 percent from the total cereal cultivated area (Taffesse et al. 2012).

> 10 Tiruneh et al. (2001) documented that female households were almost 28 percent less productive, in terms of value per hectare, than male, in Ethiopia’s central highlands area. This gender difference was mainly explained by differences in inputs, such as farm size, livestock, and use of inorganic fertilizer, among others.

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