Agricultural Productivity and Poverty Reduction in Nepal

This paper provides for the first time a clear quantitative link between agricultural productivity and poverty among rural households in N epal. Using data from a nationwide N epal L iving S tandard S urvey 2004, we first estimate household‐specific productivity per worker under both C obb– D ouglas and translog production functions. Second, the paper identifies the determinants of productivity. Third, we explore a theoretical link between productivity and poverty using S en's poverty index and find empirically that productivity growth substantially helps poverty reduction. Finally, the integrated effects of changes in productivity determinants are found to be stronger than the outcomes of sectoral policies taken in isolation.