Determinants Of Urban Household Vurnerability To Poverty In Ethiopian: Evedence From Adama

Abstract

In this study an attempt is made to examine urban households’ vulnerability to poverty and its determinant, from a single visit household survey of Adama town. Moreover, the study tries to find out which groups of households are more likely to be poor and to remain poor in the near future. Hence, primary data was collected from 204 households drawn from four selected kebeles using stratified random sampling Employing the Cost of Basic Need (CBN) approach, total poverty line of the study area is estimated to be Birr 325 per month per adult equivalent and 30.88 percent of the population is observed to be poor. The 3 step FGLS estimation result shows that the incidence of vulnerability to poverty in the area is 38.72 percent and an additional of 6.3 percent of the population is found to be relatively vulnerable using the observed poverty rate as a threshold. From the descriptive statics a household headed by female, less educated, pensioner and unemployed is relatively more vulnerable to poverty. The OLS estimation result shows vulnerability to poverty is positively influenced by high dependency ratio, low educational attainment of head, age and shock like higher price of goods and services. Conversely vulnerability is negatively associated with: asset ownership, and government employee, NGO employee, transfer receive availability of credit, higher education attainment, ownership of asset and membership of community association. The results suggest a number of policies and programs that can reach the most vulnerable and reduce their probability of becoming poor in the future. These include: appropriate implementation of family planning programs, increasing investments in employment creation and productivity enhancement, and investment in human capital. For those households who lack economic assets, it will be helpful if development policies prioritize the building up of assets through financial services. The study also suggests the importance of policies that protect households from negative impact of shocks and crises.