A Threshold Effect Analysis of Households' Ability to Maintain Economic Welfare: Rural–Urban Dichotomy in Ghana

ABSTRACT This study examines the ability of households to maintain economic welfare and the threshold at which it occurs. We use the Mobile Financial Service Survey (MFSS) data comprising a probability sampling of all Ghanaian households for the econometric analysis. Also, we engage two waves of the Ghana Living Standard Survey (GLSS 6 & 7) and the Demographic and Health Survey (DHS 2008 & 2014) to analyze household poverty trends. Using multinomial logistic regression and Lowess smoothing techniques, we find that poverty is a matter of the nature of residence in Ghana as rural households are poorer than their urban counterparts. Also, education negatively correlates with poverty, and household characteristics influence the poverty status of households through the household's ability to have an emergency fund, to self‐finance their typical expenditures, and to pay their bills. Other findings and policy implications are discussed.