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JUNE 2011<br />

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 2<br />

Table II. Marginal Probabilities and Maximum Likelihood Estimates of Probit<br />

and Logit Model<br />

Logit Model<br />

Probit Model<br />

Variable<br />

Coefficient<br />

Standard<br />

Error Prob. Coefficient<br />

Standard<br />

Error<br />

Prob.<br />

Constant -0.83061 1.98429 0.6755 -0.67129 1.07578 0.5326<br />

Age -0.10260*** 0.03857 0.0078 -0.05432*** 0.02104 0.0098<br />

Dependency ratio 0.28442* 0.15816 0.0721 0.17537** 0.08655 0.0427<br />

Education -0.27469** 0.12665 0.0301 -0.14853** 0.0699 0.0338<br />

Household Size 0.12877* 0.08446 0.1273 0.06859* 0.04663 0.1412<br />

Unemployment 0.78594*** 0.32372 0.0152 0.42563*** 0.18135 0.0189<br />

***, **, * show significant at 1%, 5% and 15% level respectively.<br />

The estimated results of the logit and probit models are given in above Table 5.5. Five variables<br />

were regressed using logit and probit models; of which all variables are significant in case of<br />

both probit model and logit model. The results of both logit and probit models are almost similar<br />

to each other.<br />

Age of Household Head<br />

Age of household head has negative relationship with poverty. As the age of household head<br />

increases, poverty decreases both in the logit and probit models. According to first hypothesis<br />

age of household head and poverty has negative correlation with each other. Osinubi (2003)<br />

also found the negative relationship between the age of household head and<br />

poverty. According to economic theory, as the age of household head increase he gets<br />

experience and more chances of getting good job. As a result income increases and leads to<br />

resistant against poverty. But up to a specific limit as the age of household head increase he will<br />

get retired and will not be able to do a job and to raise income to defend poverty.<br />

Dependency Ratio<br />

Dependency ratio has the result according to our second hypothesis that is dependency ratio and<br />

poverty has positive correlation. As the dependent members in a household increase, the burden<br />

of feeding more persons increases with a limited income. Yusuf et al. (2008) found that larger<br />

the dependency ratio of a household, the more likely that the household will be poor. In<br />

dependency ratio we include child under the age of 14 years, old people above 64 years and<br />

female under the age of 14 years to 64 years at home but not working.<br />

Education of Household Head<br />

Education of household head has also a strong impact on poverty. From the third hypothesis it<br />

was hypothesized that education of household head affects poverty negatively. There is more<br />

jobs opportunities for more educated and a high qualified person and vice versa. Because higher<br />

the level or number of years of schooling, the better-exposed one is and also more enlightened.<br />

Hence one is adequately informed to devote a sizeable amount of the household income to basic<br />

need to maintain a particular standard of living suitable to his level of educational standard.<br />

Secondly, income and educational status tends to move together in the same direction. Therefore,<br />

with improvement in the level of education, one is better placed in terms of income generation<br />

and therefore purchasing power of the person well increased and thereby improving his standard<br />

of living and defends against poverty. This is also justified by the research conducted in Uganda<br />

(2002) that Households with heads who were better educated were less poor than those having<br />

less education.<br />

COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 1476

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