Household Consumption Behavior in Ethiopia: An Urban-Rural Comparison Using Micro Data
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Date
2011-06
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A.A.U
Abstract
his paper presents a study of the consumption behaviors of the rural and urban
Ethiopian households. It estimates a complete set of consumption equations for
expenditures on different group of commodities, applying the Working-Lesser model. The
estimation of the required parameters is based on data from the rural and urban household
sun1eys conducted by the department of Economics.
The urban-rural welfare differences are observed across different regions, categories of
educatioll levels, categories of age groups and sex groups. Apart from this, significant
welfare differences between the rural and urban households have also been observed. Both
the rural and urban household's expenditure elasticities show that clothing, durable goods,
housing, education and medical care and drinks and stimulants turn out to be luxwy good
while the rest are becoming necessity goods. Differences in elasticities between the two
groups are also obtained. Disaggregated by income groups the estimates of elasticities
show that the expenditure elasticity is inversely proportional to total expenditure, while
marginal budget shares are declining for necessity goods and increasing for luxwy goods.
The marginal budget shares for food are quite high ill both sectors. In addition, the
estimates for food conform to the findings of other studies. This attribute makes the
agricultural sector the springboard for development strategies.
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Keywords
Comparison Using Micro Data, Urban-Rural