Effects of Urbanization on Welfare of Peri-urban Households in Central and North Gondar Zones, Ethiopia

Asset holding; Consumption; Expenditure; Propensity score matching


January 1, 2023


Background: Urban expansion in many developing countries has been taking place through the inclusion of nearby rural villages competing against the major productive assets of the subsistence farm households in these villages. Empirical evidence on the effect of this urbanization process on the welfare of peri-urban households is vital. However, such information is scanty in the study area.
Objective: This study was aimed at examining the effects of urban expansion on the welfare of periurban households proxied by consumption expenditures per adult equivalent in Central and North Gondar Zones of Ethiopia.
Methodology: The research used cross-sectional data collected from 405 sample respondents. Multistage random sampling together with purposive sampling techniques were applied. The data were analyzed using descriptive statistics and impact analysis (propensity score matching) procedure.
Results: The largest monthly expenditure of the sample households was food expenditure which is on
average about 1070 Ethiopian Birr per adult equivalent in 2019. Other expenditures included
miscellaneous (water, electricity, cloth, transport and communication), education and home furniture
in their order of importance. Peri-urban households’ consumption expenditure per adult equivalent
was 1234.5 ETB while that of rural counterparts was 922.6 ETB. The difference was statistically
significant (P < 0.05), indicating that urbanization has a positive effect on consumption expenditure. In terms of asset holding, peri-urban samples had a more additional home and other fixed assets such as carts, mills, and rickshaws (Bajaj) compared to rural households.
Conclusion: The average monthly consumption expenditure per adult equivalent of peri-urban households was higher by 33.8% than that of the rural households. The results indicate that increasing compensation for peri-urban households can better improve household consumption thereby their welfare.