_Construction of the Outcome Variables._ I use two different measures of household welfare: consumption expenditure per capita and wealth. Consumption expenditure has three components: food, education, and other non-food. The ESS has information on each household’s consumption expenditure on 25 commonly consumed food items in Ethiopia,<sup>13</sup> for a one-week recall period, which is annualized by multiplying the aggregate value by 52.<sup>14</sup> It further has annual household education expenditure, which is household expenditure on school fees, uniforms, books, stationary, and so on, and the value of scholarships and assistance received by household members from the government or other organizations. The ESS further has household expenditure on 11 basic household goods (batteries, charcoal, matches, and so forth) for a one-month period and 12 other goods (furniture, clothing, kitchen equipment, and so forth) for a 12-month period. Expenditure on basic goods is annualized and together with expenditure on other goods it yields annual household other non-food consumption expenditure. These components are converted into per capita terms and added together to construct annual household consumption expenditure per capita.<sup>15</sup> Region-specific spatial and countrywide temporal price indices from the CSA and World Development Indicators, respectively, are applied to convert all the values into 2016 prices.

The ESS has rich information on each household’s housing conditions, ownership of a wide array of assets, and access to other indicators of wealth. I use this to construct round-specific composite wealth score for each household using principal component analysis, following <mark>Rutstein (2015).</mark><sup>16</sup> In the interest of retaining spatial and temporal comparability of the composite wealth score, I constructed it at once using the entire household-round observations. In particular, in constructing the wealth score, I include whether a household lives in its own house, and a household’s number of members per number of sleeping rooms in the main dwelling, access to

> 13The (25) food items that are included in the food consumption aggregate are cereals ( _teff,_ wheat, barley, maize, sorghum, and millet), pulses (horse beans, chickpeas, field peas, lentils, and haricot beans), oil seeds (Niger seed and linseed), fruits and vegetables (onions and bananas), tubers and stems (potatoes and _kocho/bula_ ), stimulants (coffee and chat) and others (meat, milk, cheese, eggs, sugar, and salt). These items are comprehensive enough to capture the most commonly consumed food items not just nationally but also regionally for each of the 11 regions of the country.

> 14These items could be purchased, own produced, or gifted from others. The value of purchased items is directly collected while the median price from the lowest geographical unit for which there are at least 10 purchase price observations is used to construct the value of food items that are own produced or gifted from others.

> 15Before calculating the total consumption expenditure, a few adjustments are made to food consumption expenditure. First, households with zero reported aggregate consumption from all of the food items are excluded. Next, food consumption expenditure per capita for each of the food items is winsorized at the 98th percentile in the ESS1 to correct for outliers while the winsorization is at the 99th percentile for the other two rounds of surveys, as these rounds have fewer outliers. Finally, the bottom 2nd percentile of aggregate food consumption expenditure per capita is winsorized in each round of the survey.

> 16I constructed the ESS wealth index in the same fashion as the wealth index in the Demographic and Health Surveys (DHSs) - ( <mark>Rutstein, 2015).</mark> Specifically for the Ethiopia DHS wealth index construction, see: http://www.dhsprogram.com/topics/wealth <u>index/Wealth-Index-Construction.cfm.</u>

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