As can be seen, relatively land-rich households have been induced to increase the sale of their livestock in response to crop related shocks (such as waterlogging, insect attacks and animal trampling) among the set of adverse idiosyncratic events. In contrast, the signi...cant negative coe¢ cient of adverse female labor supply shocks a¤ecting female adults is unexpected and di¢ cult to explain. In general, there is limited evidence on the relationship between adverse idiosyncratic shocks and livestock transactions although farm households keep their wealth mainly in the form of livestock.<sup>15</sup> This very weak relationship is in agreement with previous studies that employed data from other SubSaharan African countries (examples are Udry, 1995 in Nigeria and Fafchamps, Udry and Czukas, 1998 and Kazianga and Udry, 2006 in Burkina Faso).

There was, however, a general a priori expectation that livestock to a large extent would serve as a bu¤er stock, being at the center of the portfolio of farm households in Ethiopia. This expectation in contrast with the obtained results necessitates further investigation particularly taking some of the features of live animals into consideration. In this regard, we have discussed in the theoretical part of this study that there might be a hierarchy in the sale of di¤erent types of livestock in response to adverse events for reasons related to the size of live animals and their direct role in agricultural production. To be more speci...c, cattle are directly used in crop production and they are most likely subject to diminishing marginal returns. Over and above, the degree of indivisibility and transactions costs required in marketing livestock may di¤er signi...cantly across di¤erent types of live animals. In view of this, we estimate the friction model separately for cattle and other animals including calves. The estimates are given in Tables 7 and 8, respectively.

Let us ...rst consider cattle excluding calves. The results are quite similar to those for aggregate net sales of livestock, except that here the panel-level variance component is insigni...cant, suggesting that the panel estimator is not di¤erent from the pooled estimator. The weak relationship between cattle sales and adverse shocks might be explained by their direct role in crop production and their sheer size as compared to other animals.<sup>16</sup> The estimates for the alternative live animals are di¤erent from those for cattle transactions. To start with, household heterogeneity plays a role in the case of the alternative – live animals. In addition, the shock variables that explain net sales of other animals primarily of small ruminants –are not the same as those explaining net sales of cattle. Farm-speci...c rainfall shocks are compensated by an increase in the sale of other animals, but this applies only to households in the upper half of the per capita land distribution.

> 15In the sample villages close to 80 percent of the households held part of their wealth in the form of livestock. But the mean value of livestock for the land rich is greater than that of the land poor. The mean values are found to be statistically di¤erent from each other between the two groups of households. 16Webb and von Braun (1994) reported that less than 1 percent of the sampled households in the seven villages covered by the Ethiopian Rural Household Survey sold an oxen and productive cow during the 1984 severe drought and famine that had a¤ected most parts of the country.

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