Alelign Thesis

College of Business and Economics
Department of Economics
THE IMPACT OF LOW-COST HOUSING DEVELOPMENT

PROGRAM ON URBAN HOUSEHOLD POVERTY REDUCTION:
EVIDENCE FROM DESSIE CITY, SOUTH WOLLO ZONE,
AMHARA REGIONAL STATE
A Thesis Submitted to department of Economics In Partial Fulfillment

of the Requirements for the Award of Degree of Master of Science in
Development Economics
By
Alelign Asichalew
Advisor
Amare Mitiku (PhD)
September, 2020
Dessie, Ethiopia
THE IMPACT OF LOW-COST HOUSING DEVELOPMENT
PROGRAM ON URBAN HOUSEHOLD POVERTY STATUS:
EVIDENCE FROM DESSIE CITY, SOUTH WOLLO ZONE,
AMHARA REGIONAL STATE
A Thesis Submitted to department of Economics In Partial Fulfillment

of the Requirements for the Award of Degree of Master of Science in
Development Economics
By
Alelign Asichalew
Advisor:
Amare Mitiku (PhD)
September, 2020
Dessie, Ethiopia
ii
APROVAL SHEET
SCHOOL OF GRADUATE STUDIES
WOLLO UNIVERSITY
I hereby certify that I have read and evaluated this thesis entitled “The Impact of
Low-cost Housing Development Program on Urban household poverty status:
Evidence from Dessie city, South Wollo Zone, Amhara Regional State” prepared
under my guidance by Alelign Asichalew. I recommend that it be submitted as
fulfilling the thesis requirement.
Amare Mitiku (PhD)

Major advisor signature date
As member of the board of examiners of the MSc. thesis open defense examination, we
certify that we have read, evaluated the thesis prepared by Alelign Asichalew and
examined the candidate. We recommended that the thesis be accepted as fulfilling the
thesis requirement for the degree of MASTERS OF SCIENCE IN DEVELOPMENT
ECONOMICS.
Chairperson signature date
Internal examiner signature date
External examiner signature date
iii
DEDICATION
This thesis is dedicated to my parents and to my all teachers, those who have thought me
from the starting class of grade 1 up to this moment, and giving their knowledge and
wisdom without greedy, to look myself at this academic and behavioral success. .
iv
STATEMENT OF AUTHOR
By my signature below, I declare and affirm that this thesis is my own work. I have
followed all ethical and technical principles of scholarship in the preparation, data
collection, data analysis and complication of this thesis. Any scholarly matter that is
including in the thesis has been recognition through citation.
This thesis has been submitted in partial fulfillment of the requirements for MSc. degree
at Wollo University and is deposited at the university library to be available to borrow
under rules of the library. I solemnly declare that this thesis is not submitted to any other
institution anywhere for the award of any academic degree, diploma, or certificate.
Brief quotations from this thesis are allowable without special permission provided that
accurate acknowledgement of the source is made. Requests for permission for extended
quotation from or reproduction of this manuscript in whole or part may be granted by the
head department of l economics or the dean of the school of graduated studies when in
his/her judgment the proposed use of the material is in the interest of scholarship. In all
other instances, however, permission must be obtained from the author.
Name: Alelign Asichalew Signature:
Date of submission: September, 2020
Place: Wollo University, Dessie
v
BIOGRAPHICAL SKETCH
The author was born from his parents Asichalew Abi and Sile Keberte on 8 November,
1985 E.C in a small village called Unit Seven in Abeshege woreda of Guragie zone in
SNNPR, Ethiopia. He attended his elementary school in Unit seven primary school, from
grade 0-4 in Abeshege woreda (from the year 1994-1998 E.C), and continued his junior
school in Tedale Darege junior school in Abeshege woreda from the year 1999-2002 E.C.
He has also joined Tadele Darege secondary school in Abeshege woreda, and completed
grade 9 and 10 in this school in the year of 2003 and 2004 E.C. He had attended his
preparatory class in Yaberuse Wolkite comprehensive senior high school and preparatory
school in Wolikte until he joined Wollo University in 2007 E.C and graduate with BSc.
degree in the year July, 2009 E.C in Agricultural Economics . After graduation, he
served in Wollo University, colloge of Agriculture, department of Agricultural
Economics in full time of his work for 13 months (from August 2009- September 2011
E.C) as graduate assistance - I. He joined Wollo University in September 2011 E.C to
pursue his M.Sc. degree in Development Economics program having his part time duty in
Wollo University.
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ACKNOWLEDGMENTS
Above all, I would like to thank the almighty God, who has made everything to be
favorable under his almighty of good will throughout my life. My special thanks go to my
major advisor Amare Mitiku (PhD) for his valuable comments, guidance and
encouragement from proposal write up to questionnaire development and submission of
the final thesis write up and for shaping the study to this end. In addition, I would also
like to thank to Mr. Binyame Beyene (MS.c) for his remarkable support right from the
early preparation of my proposal up to analysis of the thesis.
I would like to thank also my beloved family, Without their support, it would have been
difficult to start and complete the course as whole and this work on time. I also wish to
express my heartfelt thanks to the Dessie town residents especially Menafesha sub city,
and Banbuaweha sub city resident, who responded to my numerous questions. Last but
not least I would like to express my deepest gratitude to all who has a hand on my thesis
work without mentioning each.
vii
Table of content
Contents page
APROVAL SHEET............................................................................................................iii
DEDICATION....................................................................................................................iv
STATEMENT OF AUTHOR..............................................................................................v
BIOGRAPHICAL SKETCH..............................................................................................vi
ACKNOWLEDGMENTS.................................................................................................vii
Table of content................................................................................................................viii
List of table.........................................................................................................................xi
List of figure......................................................................................................................xii
List Appendix...................................................................................................................xiii
Abbreviation and acronyms..............................................................................................xiv
Abstract.............................................................................................................................xiv
CHAPTER ONE..................................................................................................................1
INTRODUCTION...............................................................................................................1
1.1. Background of the Study..........................................................................................1
1.2. Statement of the Problem..........................................................................................3
1.3. Research questions....................................................................................................4
1.4. Objectives of the study.............................................................................................5
The specific objectives include:...................................................................................5
1.5. Research hypothesis..................................................................................................5
1.6. Significance of the research......................................................................................5
1.7. Delimitation/ Scope of the study..............................................................................6
1.8. Limitation of the study..............................................................................................7
1.9. Meaning and Definitions of terms............................................................................7
1.10. Organization of the study........................................................................................8
CHAPTER TWO.................................................................................................................9
LITERATURE REVIEW....................................................................................................9
2.1. Theoretical review..................................................................................................10
2.1.1. Poverty and its measurement...........................................................................10
2.1.2. The effect of urbanization on housing.............................................................11
2.1.3. Poverty In Urban..............................................................................................12
2.1.4. Housing as a means for out of poverty............................................................13
viii
2.1.5. Housing Co-operative led housing development.............................................14
2.1.8. An overview of housing conditions in Ethiopia..............................................15
2.2. Empirical studies....................................................................................................15
2.2.1 The links between housing and poverty...........................................................15
2.2.2 Factors Influencing On Low Cost Housing Development...............................16
2.3 conceptual frameworks............................................................................................22
2.4 Research Gap of the Study......................................................................................23
CHAPTER THREE...........................................................................................................24
RESEARCH METHODOLOGY......................................................................................24
3.1. Description of the study area..................................................................................24
3.2. Research Design.....................................................................................................24
3.3. Source of data and types.........................................................................................25
3.4. Target population....................................................................................................25
3.5. Sampling technique, Sampling frame and Sample size determination...................25
i. For rented households.........................................................................................25
ii. For low cost house owner households.............................................................26
3.6. Method of data collection.......................................................................................27
3.6.1. Structured questionnaire..................................................................................27
3.6.2. Focus group discussions (FGDs).....................................................................28
3.7. Methods of data analysis........................................................................................28
3.8. Model Specification................................................................................................28
3.8.1 Determinant factors for low cost housing development (probability of being
house owner)..............................................................................................................28
Assumptions of Binary Logistic Regression.............................................................29
Maximum Likelihood Estimation..............................................................................30
3.8.2. The impact of low cost housing development on urban poverity status..........32
3.8.2.1. Propensity score matching (PSM)................................................................32
3.8.2.2. Sensitivity Analyses for Selection on Unobservable....................................36
3.9. Statistical and Model Specification Tests...............................................................37
3.11. Ethical considerations...........................................................................................43
CHAPTER FOUR.............................................................................................................45
RESULTS AND DISCUSSION........................................................................................45
4.1. Introduction.............................................................................................................45
4.2. Poverty line calculation..........................................................................................45
4.3. Descriptive analysis of survey data........................................................................45
ix
4.3.1. Socioeconomic characteristics of the respondents..........................................45
4.3.2. Role of housing................................................................................................51
4.3.2.1. Housing and Health......................................................................................51
4.3.2.2 Housing and Security.....................................................................................54
4.3.2.4. Housing and Human Capital Development..................................................55
4.3.3. Urban Poverty and Housing.............................................................................58
4.3.3.1. Poverty status of respondents.......................................................................59
4.3.4. Focus group discussion results........................................................................60
4.4. Result of the Econometric Model...........................................................................61
4.4.1. Factors Affecting Participation of low cost housing development..................62
4.4.2. Impact of low cost housing development on household poverty status..........66
4.4.2.1. Propensity Scores Estimation.......................................................................66
4.4.2.2. Identifying Common Support Region..........................................................67
4.4.2.3. Checking for Overlap and Common Support...............................................67
4.4.2.4. Choosing Matching Algorithm.....................................................................68
4.4.2.5. Testing the Balance of Propensity Score and Covariates.............................69
4.4.2.6. Average Treatment on Treated (ATT)..........................................................71
4.4.2.7. Impact of low cost housing development on Household’s poverty status....72
4.4.2.8. Sensitivity Analysis......................................................................................72
CHAPETR 5......................................................................................................................74
5. SUMMARY, CONCLUSION AND RECOMMENDATIONS....................................74
5.1 Summary..................................................................................................................74
5.2 Conclusion...............................................................................................................76
5.3 Recommendation.....................................................................................................77
REFERENCES..................................................................................................................78
APPENDIX........................................................................................................................83
x
List of table
Table 1: Proportional sample allocation method...........................................................................27

Table 2:- Variable definition, measurement and expected effect on independent variables.......44
Table 3:- Summary of descriptive statics for discrete variables for low cost housing participation
......................................................................................................................................................49
Table 4:- Summary of Descriptive Statistics for Continuous Variables by Access to housing........51
Table 5:- The main method of disposal of household waste and garbage....................................51
Table 6:- Type of sanitation..........................................................................................................52
Table 7:- Health problem because of sanitation...........................................................................53
Table 8:- Reasons for the health problem....................................................................................53
Table 9:- Condition of treatment..................................................................................................54
Table 10:- Reasons for not getting medical treatment.................................................................54
Table 11:- Safety of neighborhood...............................................................................................55
Table 12:- Incidence of negative impact of female outside work.................................................56
Table 13:- Ngative impact of female outside work.......................................................................57
Table 14:- Reasons for children work outside home....................................................................58
Table 15:- Summary statistics of household expenditure.............................................................59
Table 16:- summary statistics of sampled household poverty status...........................................60
Table 17:- Maximum likelihood estimates of the logit model and odds ratio.............................66
Table 18:- Summary of Matching Score by Groups.......................................................................68
Table 19:-. Performance criteria of matching algorism.................................................................69
Table 20:- Balancing test of the covariates based on radius caliper matching method................71
Table 21:- Results of chi-square test for joint significance of variables........................................72
Table 22:- Estimated ATT of household income and asset accumulation.....................................73
Table 23:-Simulation-based Sensitivity Analysis results................................................................74
xi
List of figure
Figure 1Figure 1:- Conceptual frame work: link of between participating in low cost housing
development and poverty status..................................................................................................23
Figure 2Figure 2 common support for region propensity score...................................................69
xii
List of Appendix
Appendix I. Model specification error tests…………………………………83
Appendix II Logit model estimation result…………………………………..84
Appendix III Logit estimation for pscore…………………………………….85
Appendix IV Average Treatment effect on the Treated (ATT) estimation for poverty
status…………………………………………………………………………..87
Appendix V psmatch2 for poverty status……………………………….……94
Appendix VI pstest result…………………………………………………….95
Appendix VII Base line ATT and Simulated ATT Analysis for poverty status Using
Radius Caliper…………………………………………………………………97
xiii
Abbreviation and acronyms
ATT Average treated effect on treated

HHH House Hold Head
NGO None Government organization
OLS Ordinary least square
UN United Nation
UNESCAP United Nations Economic and Social Commission for Asia
UN HABITAT United Nation Human Settlement Programme
USD United States Dollar
xiv
Abstract
Housing is one of the strongest indicators of human being basic needs and has a
profound effect on the quality of life, health, welfare as well as productivity of man. In
less developed countries, a large proportion of urban residents do not have access to
decent housing at an affordable cost. This paper evaluates the impact of low cost housing
development program on urban household poverty status using a cross-sectional data
from Dessie city, south wollo zone, Amhara regional state. Samples of 240 (79 private
rented house and 161 low cost house owner (from participating low cost housing
development) households were taken as respondents of this study, and 240 samples were
properly completed and returned from the distributed questionnaires. The data generated
to meet these objectives were collected via structured questionnaires and focused group
discussion. The study has employed logit model to identify determinants of low cost
housing development participation and propensity score matching model to analyze the
impact of low cost housing development on urban household’s poverty reduction. The
logistic regression model has considered participation on low cost housing development
as dependent variable (participant and non-participant). The result of logit regression
indicated that from fourteen hypothesized variables that determine households’
probability of participation in low cost housing development eight of them were found
statistically significant. The study has found that gender of household head, employment
sector, income, loan access, land condition, cost of land, infrastructure development, and
saving practice were the variables that significantly influence households’ participation
of low cost housing. Propensity score estimation technique (Radius caliper matching with
0.25 radius) revealed that low cost housing development participant has 59.1% of
greater probability to being non-poor than non-participant. The study concluded that low
cost housing development has positive and significant impact on urban household’s
poverty status (to be non-poor). Therefore the national government, non- government
organization, and the local authority in study area should have to take considerable
action and work collaborate for making things as much smooth enough to accessed
housing for the low income groups.
Keywords: Poverty, impact, Household, Logistic Regression, Binary Logistic Regression,
propensity score matching model
xv
CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
One result of urban growth is the urbanization of poverty. A significant and increasing
proportion of the growing urban populations are living on low incomes. For example,
more than three- quarters of the poor in Latin America already live in cities, and many
poverty – related problems – such as a lack of secure housing, or access to water and
sanitation- tend to be more prevalent in urban than rural areas (UN – Habitat, 2015, p15).
The higher living costs force the poor into spending a high proportion of their incomes on
basic human needs, including food, water, and housing. It has been estimated that nearly
1 billion urban residents in developing countries are poor. Every morning, nearly 1
million people (UN- Habitat, 2012 a, p14) wake up in insecure, substandard homes facing
an uncertain day, let alone a future.
Housing is one of the strongest indicators of human being basic needs and has a profound
effect on the quality of life, health, welfare as well as productivity of man; in less
developed countries, a large proportion of urban residents do not have access to decent
housing at an affordable cost. Because of this, inadequate housing condition has become
an intractable challenge that has continued to receive attention from governments,
professionals, developers and individuals in most developing countries (Adeleye
Olufemi, 2016).
UN world urbanization (2011) indicates that the level of urbanization in the world as a
whole was about 46.6 percent in 2000, 50.6 percent in 2010 and it is supposed to reach
57.2 percent in 2025. The corresponding figures for African countries are 36.0 percent,
40.0 percent, and 47.2 percent respectively. Ethiopia was 14.9 percent urban in 2000 and
16.7 percent in 2010 and it is projected to be 21.3 percent urban by 2025. This shows that
1
urbanization all over the world is expanding from time to time and the change has vast
implication on the living conditions of the urban society.
Housing is the leading component of urbanization, it is more numerous, more extensive,

and has represents more investment than any other single use. Housing is fundamental to
the health and wellbeing of families and communities. For this reason access to quality,
affordable housing is critical in any society. Although housing can be temporally or
permanent structures, Jiboye (2016) defines housing as permanent structures for human
habitation. It could also be defined as a home, building or structure that is a dwelling or
place for habitation by human beings. The term “house” includes many kinds of
dwellings, ranging from rudimentary huts of nomadic tribes to free standing individual
structures. He notes that housing has become a critical component in the social, economic
and health fabric of every nation. Its history is inseparable from the social, economic,
cultural and political development of man.
Ethiopia’s urban population has more than doubled in the past 20 years, from 7.3 million
in 1994 to an estimated 16.7 million in 2014 (CSA, 2013). Ethiopia's economy is
predominantly, based on agriculture, which accounts for 41 percent of GDP as per
2010/11. About 29.6 percent of the population (as per 2010/2011), lives under the
poverty line, which is the minimum level of income or expenditure, deemed necessary to
achieve minimum requirements of life. Poverty in Ethiopia is more sever in rural areas as
compared to the urban areas. 30.4 percent of the population in rural areas is poor whereas
in urban areas it is 25.7 percent (MoFED, 2012).
The trend of urban areas expansion are common in the whole region of the country, which
presents a huge opportunity to shift the structure of the economic base, from agriculture
to the larger and more diversified urban industrial and service sectors. However, poor
management and planning in urban Ethiopia results in high unemployment, challenges in
the provision of infrastructures, services, and housing. Hence, low quality of life, low life
expectancy, food shortages and high incidence of poverty characterize most of the urban
areas (WB, 2015).
2
The situation is not different in Dessie, since it is part of the country. The 31 percent of
the city population is living under the poverty line and 25 percent of active population is
unemployed (Dessie City Administration, 2017). According to the household survey
conducted by Urban Institute in October 2017, 52 percent of the household get monthly
salary of less than 1750 birr; 25 percent of them get between 1750 to 2950 birr per month
and 20 percent of them get 2950 or more birr per month.
1.2. Statement of the Problem
For decades, both rural and urban poverty in Ethiopia has remained pervasive and ever
deepening. Despite the decline in the level of poverty currently in Ethiopia, there are about 22.6
million poor people in 2013/14 who are living under the poverty line (which is very close to PPP
US$1.25 a day on food and non-food items) and who are unable to satisfy their basic needs
(Sumner and Meera, 2015). Urban poverty is different from rural poverty with respect to its
incidence, economic, demographic and political aspects. The phenomenon of urban
poverty reflects various economic and institutional factors. Since the urban population is
dependent on cash income for all goods and services, macroeconomic shocks tend to hit
urban populations particularly hard. Physical proximity to social and infrastructure
services does not guarantee actual access or affordability for slum dwellers and other
poor urban residents.
The urban poor not only experience lack of income and access to assets and basic
services, but also devalued social status; marginalization in urban space and a degraded
living environment; limited access to justice, information, education, decision-making
power, and citizenship; and a vulnerability to violence and loss of security (Kessides,
2005; UN-Habitat, 1996). In Ethiopia, the depth of poverty is slightly higher in rural
areas than in urban centers. However, urban poverty in Ethiopia is characterized by lack
of access to housing and basic housing facilities, overcrowding, residing in slum and
squatter settlements and high levels of contamination and high rate of unemployment.
Many studies addressing the causes and solutions to poverty have come to the conclusion
that housing for the poor is of critical importance. When discussing the family problems
and the most important factors to bring the family out of poverty, the poor almost always
3
place housing on the top of their list of priorities. World Bank and UNDP reports have
also recognized that poverty alleviation has to focus on asset formation and not only on
income generation in order to be successful (UN Habitat, 2014).
Even though it is believed that housing has great role as an interrupter from falling into
chronic poverty and a ladder to move out of poverty, the government action, as a care
taker and responsible body to move out its citizen out of poverty, by itself could not give
best solution on the reduction of housing poverty because of its limited resource, capacity
and different factors that constitute for the involvement of low cost housing development
for the poor. At this time, we will get the involvement of NGOs and residential housing
co-operatives the better solution. NGOs can contribute a lot in housing provision for the
poor and marginal groups who are on the line to fall into chronic poverty. Through its
role of providing housing, on one hand, they will interrupt the poor from falling into
socio-economic decline and on the other hand, they will become a ladder for the poor to
be out of poverty. On top of this, housing co-operatives have significant advantage in
their potential to promote integrated and viable urban communities, mobilize self-help
sources and group dynamics, and offer limited social security through mutual aid in case
of difficulties and variety of economic activities. These all are the benefits that poor
people searches and could not find for years to prevent themselves from slipping into
chronic poverty.
Therefore, there is a need for distinguishing factors that can constitute for low cost
housing development, and contrast or comparisons between those that have access to
housing as a result of support from NGOs or through self-help housing co-operative and
those without. This is necessary to derive lessons on how providing housing for the poor
become a sustainable exit routes from poverty, because of inadequate researches of this
kind and the potential impact of housing as an interrupter from falling into chronic
poverty as well as a ladder out of poverty remains hidden for many.
1.3. Research questions
This research, therefore, tries to answer the following main questions:

i. What are the factors that constitute low cost housing development?
4
ii. What is the role of housing on poverty reduction?
iii. What is the synergy between living in non-own house and households’ poverty
status?
iv. What remedies will be applied to address housing problems?
1.4. Objectives of the study
The main objective of this study is to evaluate the impact of low cost housing
development program on urban household poverty reduction: evidence from Dessie city,
south wollo zone, Amhara regional state using propensity score matching model
The specific objectives include:

i. To evaluate factors that constitute for low cost housing development using binary
logistic model
ii. To investigate the role of housing on poverty reduction using descriptive statistics
iii. To investigate the synergy between living in non-own house and households’
poverty status.
iv. Based on research findings, draw recommendations to address the urban
household housing problems.
1.5. Research hypothesis
This study was tried to test the following null hypotheses using empirical data and the
appropriate analytical tools.
H1: Having own low cost houses has no significant impact of being not poor.
H2: There is significant different in per capital expenditure (poverty status) of low cost
house owner households and homeless (privately rented) households in the study areas.
1.6. Significance of the research
This study helps to identify whether own low cost house has any positive impact on
household poverty reduction or not. Affordable low cost houses an important part of the
5
wealth of any given urban households. When having own house, it is translated to the
wealth of the urban households provider directly or indirectly through various ways.
Therefore, the study is providing evidence to policy-makers so that appropriate

interventions and correct choices would be made with regard to allocating resources to an
area where a real difference is possible.
This study is target for the purpose of knowledge. As the matter under investigation is
known for its resource scarcity, this research contributes a lot for the academic wealth by
igniting the interest of other researchers to carry out similar studies at Amhara region as a
whole. Therefore, the findings of this study give/serve as a wake-up bell for the
stakeholders to find possible solutions.
The findings of the study were identifying the relevant impact of low cost housing
development program on urban household poverty status in Dessie city. This helps the
relevant regulatory bodies and policymakers in formulating appropriate policies that
could enhance effective administration and management of affordable low cost housing
development program and pro poor programs in the city and in the whole urban center of
Ethiopia.
1.7. Delimitation/ Scope of the study
This study was delimited by problems of the impact of low cost housing development
program on urban household poverty status: evidence from Dessie city, south wollo zone,
Amhara regional state. The researcher selects this city purposively due to the living area
and proportional large number of urban residents have no own house based on
observation by supposing the select city is representative enough to infer about the
impact of providing affordable low cost houses on urban household poverty status in the
city. It is known that different factors may influence the urban households. However, this
paper has delimited only on the households who are living in the urban center both
having own low cost houses and not having own low cost houses.
6
Undertaking the research on urban households poverty status at international or country
level is complex task since it requires huge finance, time and data source. Due to the
above constraint, the researcher was forced to undertake the city level in Dessie, which
are one of the zones of Amhara regional state. Dessie is a city in northeastern Ethiopia.
The largest city, and the administrative center, of the wollo zone of the Amhara regional
state and located about 400 kilometers northeastern of Addis Ababa. Based on the 2013
projected population by the Central Statistical Agency of Ethiopia (CSA), Dessie woreda
has a total population of 245,129, of whom 121,177are men and 123,952 women;
209,226 or 85.35 percent (103,429 men and 105,797 women) are urban inhabitants living
in the town of Dessie, the rest of the population is living at rural kebeles around Dessie.
The scope of the study was urban households in the city of Dessie.
1.8. Limitation of the study
The major constraints include unavailability of adequate and up to date quantitative as

well as qualitative information, lack of adequate source and information in proper
recording and keeping of documents and files on the city level as well as the region. This
was create exhaustion to the data collectors and huge financial cost to knock and check
on houses in the select kebeles. Additionally, some respondents were reluctant and
unwilling to spare their time to give the necessary data.
This study focus on estimating poverty using only monetary measures the consumption
approach at household levels because is most widely used when measuring poverty. The
reason that household poverty status is difficult to measure is that it has many undefined
indicators and many indicators which are difficult to measure. These are difficult to
measure because they often rely on self-reported information, which has a large bias
because people’s perception often does not reflect reality. The researchers will doing best
and Endeavour most to secure as much information need.
1.9. Meaning and Definitions of terms
Household: Constitutes of a person or group of persons, irrespective of weather- related

or not who normally live together in the same housing unit or group of housing units and
who have common cooking arrangements (CSA, 2012).
7
Head of household: Ahead of a household is a person who economically supports or
manages the household or for reasons of age or respect, is considered as head by
members of the household or declares himself as head of a household. Head of a
household could be male or female (CSA, 2012).
Member of household: According to CSA, 2012 person constituting a household is

called a member of the household. The following are considered as members of a
household:
i) All persons who lived and ate with the household for at least six months including
those who were not within the household at the time of the survey and were expected to
be absent from the household for less than six months.
ii) All guests and visitors who ate and stayed with the household for six months and
more.
iii) Housemaids, guards, babysitters, etc. who lived and ate with the household even for
less than six months.
Household size: Is the total number of members of a household.
House: A building that functions as a home (See https://en.wikipedia.org).
Housing: Generally, refers to the social problem of ensuring that members of society
have a home in which to live, whether this is a house, or some other kind of dwelling,
lodging, or shelter (See https://en.wikipedia.org).
Kebele (ketena): Is the lowest administrative unit in an urban centre with its own
jurisdiction. It is a locality (commonly known as Kebele) formed by the inhabitants of
urban dwellers and usually constitutes a part of the urban centre (CSA, 2010).
1.10. Organization of the study
This research report is organized in five chapters. Chapter one provides a general
introduction to the whole study. Chapter two describes the review of related literature.
Chapter three provides a detail description of the methodology employed by the study.
8
Chapter four contains data presentation, analysis and interpretation. Finally, the last
chapter concludes the total work of the study and gives a conclusion and relevant
recommendations based on the findings.
9
CHAPTER TWO
LITERATURE REVIEW
2.1. Theoretical review
2.1.1. Poverty and its measurement
Over the last few decades, new perspectives on poverty have challenged the focus on
income and consumption as the defining condition of poor people. These alternative
perspectives have refocused the concept of poverty as a human condition that reflects
failures in many dimensions of human life hunger, unemployment, homelessness, illness
and health care, powerlessness and victimization, and social injustice; they all add up to
an assault on human dignity (Sakiko Fukuda-Parr,2006). Alongside this shift in
definition, there has been increasing emphasis on monitoring and addressing deficits in
several dimensions beyond income, for example, housing, education, health, environment
and communication (UN, 2010).
The monetary approach to the identification and measurement of poverty is the most
commonly used. It identifies poverty with a shortfall in consumption (or income) from
some poverty line; there is no theory of poverty that would clearly differentiate the poor
from the non-poor. Relative poverty lines (one-dollar concept) can be determine by
political consensus (Caterina Ruggeri Laderchi, et al., 2003). World Bank (2001) also
describes poverty to encompass low levels of health and education, poor access to clean
water and sanitation, inadequate physical security, lack of voice and insufficient capacity
and opportunity to better one’s life. Poverty in its most extreme form is a lack of human
needs such as adequate and nutritious food, clothing, housing, clean water and health
services (K. R. Gupta et al., 2007).
The first step in measuring poverty is defining an indicator such as income or

consumption per capital. Income typically varies more significantly than consumption. In
less-developed countries, most (but not all) analysts prefer to; use current consumption
than current income as an indicator of living standards in poor countries (World Bank,
2005).
10
The defining feature of ‘chronic poverty’ is its extended duration. Poverty that is both
severe and multi-dimensional but does not last a ‘long’ time, is by its nature not chronic.
However, it is hypothesize that duration, multi-dimensionality and severity of poverty
build upon each other. Thus, while those in severe income poverty at any given time are
not necessarily chronically poor, the chronically poor are likely to be experiencing severe
and multi-dimensional poverty. Further, duration (as well as multi-dimensionality) can be
considered as a specific type of poverty severity in itself (Hulme, D. et al, 2001).
2.1.2. The effect of urbanization on housing
Continued urbanization over the last 50 years has resulted in a situation whereby close to
half of the world's population (47.1 percent) now lives in urban areas (Barney Cohen,
2006). However, urban populations, particularly the poor, also share some important
vulnerability. It is estimated that over 900 million people, one-third of the global urban
population, and more than 70 percent of urban developing country populations, now live
in slum-like conditions. Urbanization characterizes Low incomes, poor housing and
provision of basic services, and no effective regulation of pollution or ecosystem
degradation (Diarmid Campbell-Lendrum and Carlos Corvalan, 2007).
Population growth rate of the city because of rural-urban migration resulting high rent
cost due to the insufficient housing delivery system (OE Aluko, 2010). The housing
problem, manifest in skyrocketing rent, overcrowding, poor and inadequate social
amenities (Akinyode, 2016), In order to keep going with the development process, the
urban poor acting as the driving force for rapid urbanization needs to be facilitated, by
providing with housing, medical care, transportation, educational and recreational
facilities. Among all these necessities, housing is the leading factor in achieving the
remaining ones (Malik and Wahid, 2014).
Urbanization cannot be stop because no country can afford to have a break in the growth
of economic development. The issues and problems of housing would continue to grow if
they are not tackle properly on time. The high population levels create more and more
demand for the provision of adequate housing in urban areas (Malik and Wahid, 2014).
11
The continuing growth and expansion of the urban center led to a wide gap between
housing supply and demand (UN-HABITAT, 2011). Shortage of housing supply and high
housing demand leads to high house rent and limits housing affordability to low income
households (BF Akinyode, 2016).
2.1.3. Poverty In Urban
Urban poverty is different from rural poverty with respect to its incidence, economic,
demographic and political aspects. The phenomenon of urban poverty reflects various
economic and institutional factors. Since the urban population is dependent on cash
income for all goods and services, macroeconomic shocks tend to hit urban populations
particularly hard. Physical proximity to social and infrastructure services does not
guarantee actual access or affordability for slum dwellers and other poor urban residents.
The urban poor not only experience lack of income and access to assets and basic
services, but also devalued social status; marginalization in urban space and a degraded
living environment; limited access to justice, information, education, decision-making
power, and citizenship; and a vulnerability to violence and loss of security (Kessides,
2005; UN-Habitat, 1996). In Ethiopia, the depth of poverty is slightly higher in rural
areas than in urban centers. However, urban poverty in Ethiopia is characterized by lack
of access to housing and basic housing facilities, overcrowding, residing in slum and
squatter settlements and high levels of contamination and high rate of unemployment.
The multidimensional character of poverty in Ethiopia is reflected in many respects such

as, destitution of assets, vulnerability, and human development. Poverty in Ethiopia is
also associated with certain household characteristics. For instance, as compared to richer
households, poor households in urban centers tend to have a larger proportion of
dependents, older household heads, more unemployed family members and more female-
headed households (Aredo, 2012). Moreover, vulnerability to shocks is more serious in
urban areas than in rural areas. This is partly due to the fact that urban households lack
assets such as land and livestock, which are available in rural areas. The world is rapidly
experiencing urbanization. As urbanization is increasing so also the incidence of urban
12
poverty is increasing in depth and intensity in cities of most of developing countries of
the world including Ethiopia.
The dimension of urban poverty that manifests in various ways may also include
unemployment, poor housing condition characterized in overcrowding, lack of basic
services and environmental degradation. In Ethiopia, many urban people do not meet
their basic needs (Sumner and Meera, 2015). In 2010, 11 percent of Ethiopia’s poor lived
in cities, but this percent rose to 14 percent in 2010/11. An estimate by MoFED (2013)
pointed out that 27.8 percent of Ethiopian population was absolutely poor (unable to meet
basic needs) of which 25.7 percent was urban. The number of poor people stayed almost
constant between 2004/05 and 2010/11 at 3.2 million (MoFED, 2013). Even though, the
government of Ethiopia has tried to address some problems related to poverty, the focus
given to urban areas are not gone with the extent of the problem. High population growth
due to rural to urban migration and other internal factors have making life hard in urban
Ethiopia. This really can lead to high crime, strikes and other socio-economic and
political problems. Therefore, the issues that were addressed in this study can help the
federal and local governments to design strategies for sound poverty reduction and to
tackle the real problem of urban areas in general and the study area in particular.
2.1.4. Housing as a means for out of poverty
Adequate housing is one of effective means to reduce poverty because shelter is usually
the most expensive item far households. It is argued further that housing is a source of
income because people can use their house as a place to generate income, through home
based business, renting or through its safe location (Bunnarith, 2004). Housing in the
form of home ownership is an investment and a form of saving, providing a basis for
wealth acquisition across generations. In this sense, the location and tenure attributes
associated with housing may be view as providing varying levels of opportunities for
social and economic advancement (Shlay, 1993).
13
Housing can be a ladder of out of poverty through strengthening the social capital
reciprocity within communities and between households based on trust deriving from
social ties. Research results show that home ownership provides opportunities for home
based enterprises. These are especially important for homebound women, allowing them
to contribute to households’ income, employment, freedom and social opportunities. The
success of such enterprises, however, also depends on access to assets that complement
home ownership, such as electricity, water, skills, and credit (Moser, 1998).
The homeowner household children’s are more likely to own house sooner than the renter
household children’s are. In addition, they are more likely to achieve higher levels of
education and, therefore, income. These results lead to substantially higher levels of both
housing and no housing wealth accumulation for the children of owners. In addition, for
lower income households, housing wealth proves to be a particularly important
component of total wealth accumulation (Boehm, T. P. and Schlottmann, A. M., 2001).
2.1.5. Housing Co-operative led housing development
The most significant advantage and benefit of housing co-operatives’ lies in their
potential to promote integrated and viable urban communities and mobilize self-help
sources and group dynamics. The housing cooperative cannot, and need not, substitute
for traditional social organizations, but it may also offer limited social security through
mutual aid, particularly in the case of illness, disability, death or temporary
unemployment. The housing co-operative can offer an integrated frame work, not only
for the construction and management of housing, but also for a variety of social and
economic activities including vocational and functional education, improvement of
hygiene and dietary standards, promotion of employment opportunities, and others which
may raise the standard of living of the members (Liwin, 1981).
14
Co-operative housing provision is available either through government channels or
independently. Housing co-operatives serve three basic functions towards the overall goal
of adequate shelter for their members: They enables households to pool resources to
acquire and develop land and housing, they facilitate access to finance and they enable
groups to join forces and reduce construction costs (UN habitat a, undated).
2.1.8. An overview of housing conditions in Ethiopia
According to the CSA, (2007) in Ethiopia, there are 15,103,137 housing units, which,
12,206,118 units are found in rural areas, and 2,897,019 units are found in urban areas.
Out of the housing units, about 81.4 percent are owner-occupied and 9 percent of the
units are rented from private households. In the urban areas, the owner-occupied housing
units account for about 39.3 percent and about 40.3 percent of the urban housing units are
rented from private households. In Ethiopia, the average number of households per a
housing unit is 1.044. In urban areas, the average number of persons is 3.9 per a housing
unit. In Ethiopia, based on the comparison of a number of houses and households, as
registered in CSA, (2007), there is a surplus of 531,236 household’s demand for houses.
Housing is the prime problems existed in the Ethiopian urban situation. Government
reports and study results confirmed that Ethiopia is experiencing a dire shortage of
housing. The two census results conducted in 1994 and 2007 revealed that there was a
shortage of 92 and 128.3 thousand of housing shortages. The results of both censuses
confirmed that the shortage of housing unit is a persistent problem. The government
estimates that the current housing deficit is between 900,000 and 1,000,000 units in urban
areas and that only 30 percent of the current housing stock is in fair condition, with the
remaining 70 percent needs improvements or in some cases total replacement. During the
Growth and Transformation Period (2004-2015), some were projected Ethiopia needs an
additional units of 250000 housing units per year in addition to the current backlogs
(Ministry of Urban Development, Housing and Construction (MUDHCo) , 2015)
2.2. Empirical studies
2.2.1 The links between housing and poverty
15
A review of the evidence for JRF shows a two-way relationship between housing and
poverty: housing can both mitigate and exacerbate the experience of poverty; and it can
be both a charge on income (rent and mortgage payments) and a source of income
(benefits and rents). The interaction between the two can have a big impact on the
number of people defined as ‘living in poverty’ and who they are and has significant
implications for policy (Tunstall et al, 2013).
In general, there is stronger evidence that poverty affects housing circumstances than that
housing circumstances affect poverty. People living in poverty generally have worse, and
less desirable, housing than those with higher incomes but they generally avoid bad
housing too. The UK housing system (affordable housing, Housing Benefit and the
homelessness safety net) is traditionally seen as a buffer against poverty and has been
described as the ‘saving grace’ of the welfare system. Housing policies can partly break
the link between lower incomes and worse housing conditions. Access to decent, low-
cost housing can also help to increase disposable incomes, prevent material deprivation
and maintain work incentives. However, high housing costs can also create poverty and
material deprivation and increase costs for society as a whole.
2.2.2 Factors Influencing On Low Cost Housing Development
Housing has been a concern of individual, families, group and government since the
down of urban civilization. This problem has often been linked to land acquisition
problems, levels of infrastructure development, rigid and unfavorable building
regulations. These factors are discussed more in this section.
16
Building Materials and Low-Cost Housing
Building materials constitute the largest single input in housing construction. While
Adedeji(2010) observed that about sixty (60) per cent of the total housing expenditure
goes for the purchase of building materials, Arayela (2005) averred that the cost of
building materials constitute about 65 percent of the construction cost. Ogunsemi (2010)
opined that building materials form the main factors that restricts the supply of housing
and ascertained that they account for between 50-60 percent of the cost of buildings.
nThus, Adedeji (2012) rightly observed that one main barrier to the realization of
effective housing in Nigeria as revealed in successive government efforts has been the
cost of housing in the country. He argued that in the early periods, shelter in countries
like Nigeria was easily affordable as building materials were sourced from men
immediate environment at affordable costs. Though, housing delivery efforts have
evidently been inhibited by prohibitive costs of building materials, this problem cannot
be reasonably and reliably overcome by merely resorting to the use of locally available
materials costs without due considerations to the applicable initiative, the cost of
processing and sustainability of the local materials. One of the most important
components of a sustainable building is the material efficiency.
The other factors that greatly affect the selection of building materials are their costs and
social requirements such as thermal comfort, good mechanical properties aesthetic
characteristics and an ability to construct quickly. Ideally, the combination of all
environmental, economic and social factors can give a clear description of a material, and
thus helps in a decision making process regarding the selection of the materials suitable
for buildings (Abeysundara, et, al., 2009). The process of housing development should be
based on sustainability principles, which could be applied in the conception, construction
and use of the buildings. The goals of the process are to decrease the environmental costs
incurred by inadequate constructive systems and solutions, minimizing the impacts on
natural resources, and improving users’ comfort (Amado, et al., 2007).
Availability of Land and Low-Cost Housing
17
Land constitutes a significant proportion of the total cost of financing incremental
housing construction process and access to low cost land is very essential in making the
progressive housing development process viable. Access to land determines how land is
made available for residential development to all income groups. It is conditioned by land
tenure which is inextricably linked with historical, cultural, legal and economic factors
that affect people‘s perceptions and behavior. It is related to location, the nature and
distribution of employment centers, transportation and other public infrastructural
services (Payne, 2012). Land should be made available for residential development to all
income groups. The first step to solving housing problems involves access to land by the
low income households in suitable locations. Access to land makes it possible for low
income families to construct their dwelling and access to other basic services and
employment opportunities within the urban area (Greene and Rojas, 2004). Access to
land is conditioned by land tenure which is inextricably linked with historical, cultural,
legal and economic factors that affect people‘s perceptions and behavior. It is related to
location, the nature and distribution of employment centers, transportation and other
public infrastructural services (Payne, 2012). Payne argues that for the very poor urban
households, their priority is to obtain access to land where they can maximize their
livelihoods opportunities and this is usually in prime locations in urban areas where there
is very high competition for land and land prices are very high. Payne further posits that,
for more established low income households, their ability to cover transport cost
influences their decision to construct their dwelling at less central locations in the urban
areas and the type of tenure that afford this, becomes an important element for access to
services and credit.
Developments in urban centers are regulated through land use controls. In most countries,
legislature has delegated the power to regulate land use to local authorities. The latter use
regulatory powers to prevent the construction of housing that would serve the low income
group. The most important land use controls in terms of their exclusionary effects are
zoning ordinances and fiscal zoning. Zoning Ordinances refer to policy measures which
regulate land use, population density and intensity of land use. Under these, land is
divided into areas and delineated into types of land use, for example residential,
18
commercial or industrial and minimum standards are specified for each area. Population
density is regulated through minimum plot sizes and the inclusion of multi-dwelling
(Morris, 1978). Local authorities determine land use policies without supervision or
intervention by any other government body and as such tend to regulate developments in
ways that amount to exclusionary zoning. Exclusionary zoning is the array of zoning
ordinances and practices which keep away housing within the reach of the low income
group. Zoning ordinances limit the land available for residential purposes (Gichunge,
Fiscal Zoning is a system which local authorities employ to increase property tax. The
National Commission on urban problems in USA described the process thus, “The game
of fiscal zoning requires the players, like zoning jurisdiction to attract uses which add
more to property taxes or local taxes that they require in expensive public services and
exclude uses which do not pay their own way (Rubinowitz, 1974). Local authorities seek
commercial and industrial uses including luxury housing, hence discouraging such uses
as housing for low income people. The reason being that low income housing contributes
little in property taxes due to their low assessed value. Due to this, we find that both
formal and informal low cost housing developments are often located on the margins of
cities. Land on the periphery is cheaper and more affordable for low income
development. The subsidy does not adequately provide for land costs in developing
countries. These developments are usually mono-functional settlements, removed from
employment, economic, social and transport opportunities. This has a range of
implications with regard to time spent away from home, time travelling to and from
opportunities, and the related cost implications thereof (Hancock, 2008).
Another approach was to encourage putting up of more housing units on the available
land - the high density housing approach. Given the scarcity of available land in South
Africa, a private sector company, General Motors (GM), explored different ways to
address the housing backlog by developing a variety of models for former shack dwellers.
It’s most ambitious experiment fifteen years ago in Missionvale, Port Elizabeth was one
of the first low-cost housing models in the country to use the higher-density approach.
Higher-density models made it possible to house more people on less land... The result
19
was the Sakhasonke Housing Village, a refined higher-density model that translated into
a contained, customized living space for the poor. Land regulation and property titles are
at the cornerstone of housing. In Ethiopia, land and property regulations have been
inherited from colonial times and involve a rather complex tenure mechanism framed in
many difference laws. By-and-large, land tenure was administered through a system of
customary laws and can vary depending on ethnic groups, predominant land use or ruling
system (World Bank, 2011).
Cost of Land and Low-Cost Housing

Land is a key factor of production. Access to land is a critical element in providing low
income housing (UN, 1984). The supply of land is very limited coupled by the need to for
it as a public utility for low cost housing, makes it very scarce. Consequently there is a
growing class of landless whose access to land and shelter is becoming more difficult
every day. This is a notable fact as in the past; land for low income housing was provided
or allocated easily which in most cases is no longer the case. Nabutola (2013) cites that
land in urban areas is highly valued and is mostly in the hands of the central government
and the local authorities. The only other landowners are speculators seeking to make a
quick buck. This makes land inaccessible to the majority whoneed it most but cannot
afford its premium price.
The price of land depends on many factors including location; distance from services and
amenities, nearness to commercial, academic, health facilities, availability of public
transport. The further land is from the city centre, the cheaper the price of land is likely to
become. At the city peripherals land prices may end up being low enough to be afforded
by low income groups. Unfortunately in such locations there will be inadequate or no
facilities in terms of services and amenities.
The absence of robust credit markets in developing countries is a significant impediment

to solve the housing problems. To most families, housing is the largest investment in their
lifetime and need financing to finance investments in homes. However, in developing
countries, dreams of decent homes run against most people’s inability to obtain loans.
20
Traditional mortgages often require full legal title as a security, while the urban poor live
in a condition of insecure tenure, or with intermediate forms of tenure (UN-HABITAT
2013). Financial institutions perceive few incentives to lend to the poor.
Infrastructure Development and Low-Cost Housing

Development of supporting infrastructure is a critical component of the realization of the
right to adequate housing. Urban development investment has been largely
uncoordinated, with responsibility being spread among too many institutions, including
local government, sector ministries, quasi-private companies and utility services
(Hakijamii 2012). Local government facilitation of off-site infrastructure and land
servicing (i.e. development of trunk infrastructure, water & sanitation, etc.) is critical for
affordable housing to be achieved. Indeed, it is not uncommon that due to the lack of
responsiveness of utilities and local authorities, developers have to incur infrastructure
costs themselves.
Installation of services in the form of roads, water supply, sewerage, drainage and other
utilities are part of the components for suit able housing. The capital required to install
these services is high, and the further these services have to be carried the more
expensive they become to install because of the long distance. The city does not have
enough financial capacity to service all land, especially land occupied by low income
households. Most low income households are usually located on undesirable land which
may require large capital to install services. The cost of providing infrastructure is
therefore directly proportional to availability of serviced land and accessibility thereof.
Access of such facilities to low income households is very costly. Infrastructure in the
high income districts of the city is decidedly better than in the poorer neighborhoods, but
these areas still suffer from power shortages, lack of adequate water and sewer systems
and poor road upkeep.
21
2.3 conceptual frameworks
Conceptual framework is a schematic presentation which identifies the variables that
when put together explain the issue of concern. It is a set of broad ideas used to explain
the relationship between the independent variables (factors) and the dependent variables
(outcome).
Independent variables
Personal factors
Age
Poverty status
Marital status
(Final outcome)
Educational status
Family size
Monthly income
Saving practice
Building material
Participating in low cost
Availability, cost and quality of housing development
building material practice
(Dependent variable)
Availability of land
Location of land, and land

tenure system
Infrastructure and housing Code of building
Waste management, Utilization of local resources

electricity, road network
Source own manipulation, 2020
Figure 1:- Conceptual frame work: link of between participating in low cost housing
development and poverty status.
22
2.4 Research Gap of the Study
Adequate, affordable and decent housing for low income households is clearly in short
supply. The players in housing industry are too few and there seems to be a minimal
interest of other private sector housing developers to provide low income housing units.
From the review of the literature, most studies encountered have focused on challenges
and proposed solutions to the low income housing problem in developing countries. The
literature review shows that there is no study that has been done focusing on impacts of
low cost housing development on urban poverty reduction in south wollo zone Dessis
city, Ethiopia.
23
CHAPTER THREE
RESEARCH METHODOLOGY
This chapter discusses the study area, data source, methods of data collection, sample size,
research design, analysis tools, techniques, description of variables and econometric model use
in the study.
3.1. Description of the study area
The study is conduct in Dessie Town, South Wollo zone, northeastern of Ethiopia. Dessie is the
capital city and a woreda to south wollo zone, which is one of the eleven administrative zones of
Amhara National Regional State (ANRS). Dessie town at a latitude and longitude of 11°8′N
39°38′E, with an elevation between 2,470 and 2,550 meters above sea level. Dessie is located at
a distance of 400 km from Addis Ababa. Based on the 2013 projected population by the Central
Statistical Agency of Ethiopia (CSA), Dessie woreda has a total population of 245,129, of whom
121,177 are men and 123,952 women; 209,226 or 85.35 percent (103,429 men and 105,797
women) are urban inhabitants living in the town of Dessie, the rest of the population is living at
rural kebeles around Dessie. The total urban inhabitants’ households of Dessie town are 52,307.
The majority of the inhabitants were Ethiopian Orthodox Christianity, with 80.62 percent
reporting that as their religion, while less than 30 percent of the population said they practiced
Muslim and 1.15 percent was Protestants. Dessie is one of the reform towns in the region and has
a city administration consisting of municipality and 5 sub cities and six rural kebeles. The town
has a structural plan, which was prepared in 2010 (CSA, 2007).
3.2. Research Design
This research strategy was applying more qualitative and quantitative strategy as the data collect
and analyze to reach the conclusion. Descriptive and explanatory types of research were use.
Descriptive research because of the objective of the research, which is intend to reveal the
challenge of house rent on an urban household. The study is also explanatory to explain the
24
impact of the low cost own house on the household’s poverty status. In such a case the study was
employ the binary logistic econometric model for identification of factors that constitute low cost
housing development, and propensity score matching model for estimating the impact of low
cost housing development on urban poverty status. The study is cross-sectional in the sense that
relevant data were collected at one point in time.
3.3. Source of data and types
To achieve the objective of the study, both quantitative and qualitative data were gathered from
both primary and secondary sources. The primary data were obtained from households and the
sub-cities administration office through questionnaire and focused group discussion. This helps
to get first-hand information from the residents and officials about household's situation. The
secondary data collection constitutes an extensive survey of literature from different sources
including books, journals, official documents, websites and reports from the sub-cities and city
administrations.
3.4. Target population
The population of this study was both from “Banbaweha” subcity, kebele 10 households who are
own low cost housing development project houses and from “Menafeshia” sub city “Tequame”
kebele the households who are living on privately non own houses. The population of this study
does not include all households in the sub city due to a limitation of resources such as time and
money. According to “Banbaweha” and “Menafeshia” sub cites administration documents, there
are about 27,490 populations, and about the house owned 1476 households, non-own house 722
households. Total 2198 households, 1476 owners and 722 non-owners households were target to
this study.
3.5. Sampling technique, Sampling frame and Sample size determination
i. For rented households
A multi-stage cluster sampling technique was use in choosing a sample of 79 households who is
living in non- own house for detailed study. The first stage was involve the random selection of
sub-city from 5 sub-cities located in wollo zone (because Dessie is my working, living city and
the urban problem is sever in the city), namely “Menafeshia” sub city. The second stage was
25
involve the random selection of “Tequame” kebele from 3 kebeles (due to time and budget
constraint only one kebele was selected for the non- own house households). The third stage was
involving the random selection household’s house number from the community list. In this
study, two types of sampling techniques were use. Those are from random sampling and
stratified random sampling methods. “Tequame” kebele administration household list were used
as a sampling frame.
ii. For low cost house owner households
Purposively selection of the “Banbaweha” sub city out of the total five sub cities which are
existing in Dessie city due to having a number of NGOs support and self-help housing co-
operatives low cost housing development program than other sub city. After the purposive
selection of “Banbaweha” sub city, this study was proceeding with the two main types of
sampling techniques. Those are from random sampling and stratified random sampling methods.
Sample of 161 house owner households were taken for detail study. “Banbaweha” sub city
project house administration household list use as a sampling frame.
The head of non-owner and owner households were selected from each stratum by using
stratified random sampling and by applying the principle of the proportional sample selection
method. Head of households was stratified according to their "district” (sub kebele unit) in order
to conduct the survey in the sub city. There are five “strata” and the total head of the households
is 2198 households, 1476 owners and 722. To calculate sample size the following formula is
used (Kothari, 2004, pp 175):
2
Z . p.q. N
n= 2 2
e ( N−1 ) + Z . p .q
Where, n = sample size required = 240, N = number of population = 2198, p = 0.5, q = 0.5, e =
0.05, Z = confidence level = 1.64 for 90 percent confidence.
The sample size in each stratum is proportional to the size of a stratum. With proportionate
stratification, the sample size of each stratum is proportionate to the population size of the
stratum. Strata sample sizes are determine by the following equation:
26
nh = (Nh / N) * n Where nh is the sample size for stratum h, Nh is the population size for stratum
h, N is total population size, and n is total sample size (Kothari, 2004).
Table 1: Proportional sample allocation method
Strata Number of Households Sample Size

Owner (kebele Non-owner Owner Non-
10) (Tekuam Kebele) (kebele 10) owner
(Tequam
Kebele)
Strata 1 271 130 30 14
Strata 2 248 178 27 20
Strata 3 238 165 26 18
Strata 4 385 122 42 13
Strata 5 334 127 36 14
1476 722 161 79
Source: Computed from an unpublished document of “Tequame” and kebele 10 administration
Note:- The strata were identified based on sub kebele/village administration map and both
households were selected randomly based on even (For Owners) and odd (For non-owner) house
number on 5 houses interval. For example 5 interval for odd house number 1, 13, 25, 37, etc and
5 interval for even house number 2, 14, 26, 38, etc.
3.6. Method of data collection

3.6.1. Structured questionnaire
To gather information from selected owned and rented households a formal survey was
conducted on the sample population of 240 household heads by using structured questionnaires
with closed-ended questions from each strata. The structured questionnaires were organized into
two main sections, the first section personal information of the respondents which includes
gender and age composition, marital status, educational level, employment sector of household
heads and the size of household members. The second section of the questionnaire was focus on
obtaining the socio-economic condition of the sample households of selected strata resident
respondents. It also concerns the problems of housing which includes socio-economic conditions
in terms of household’s income level, housing (being non- owned or owned) situation.
3.6.2. Focus group discussions (FGDs)
27
Focus group discussions was conduct to capture qualitative data and to fill in the gap of
information that not be covered by other methods of data collection and to validate the findings.
The discussion were conducted by giving special emphasis to owning houses and living on
rented and the solution suggestions with the same age groups men and women including
officials, stakeholders and selecting respondent.
The data was collected by 10 enumerators under the supervision of the researcher. In order to
facilitate data collection, the enumerators were give training regarding the objectives, contents,
how to complete the questionnaire and data collection procedure. The collected data was entered
in to SPSS, version 26, software.
3.7. Methods of data analysis
The main aim of the study was to analyze the impact of low cost housing development project on
urban household poverty status as measured by selected economic indicators. In an attempt to
address the research questions, various descriptive indicators such as frequency distributions,
averages, and percentages were reported and present from the field survey data collect to draw
appropriate inferences. Household demographic characteristics and socioeconomic profiles and
information were examined using descriptive analysis. The results from the descriptive statistics
also serve to develop and specify the appropriate variables to be use in the econometric analysis.
3.8. Model Specification

3.8.1 Determinant factors for low cost housing development (probability of being
house owner)
This study was intended to analyze how much the hypothesize repressor (explanatory
variable) were related to the participation (dependent variable) of households in low cost
housing development. As already noted, the dependent variable is a dummy, which takes
a value of one or zero depending on whether or not. The relationship between the
dependent and the independent variable was explained through odd ratio from STATA 14
software results. The researcher was uses binary logit econometric model to know the
relationship between the participation of the household in low cost housing development
and their determinant, because the binary logit model is used for the dummy dependent
variable and the model will be used to estimate the determinant of household to
28
participate in low cost housing development.
The logistic distribution is also more preferable than the others in the analysis of dichotomous
outcome variable, in that it is extremely flexible and easily uses a model from the mathematical
point of view and results in a meaningful interpretation (Gujarati: 2004 pp 617).
The logit model is a maximum likelihood estimator that allows for estimating the probability that
an event occurs or not by predicting a binary dependent outcome from a set of observable
independent or predictor variables.
Y i=β 0+ β 1 X 1i+ β 2 X 2 i… … … …+ β n X∋+ ε i …………………….(1)
Let us consider a linear regression of the form;
Yi = the outcome variable predicted from the equation
Xi = a vector of explanatory variables representing household
β 's = a vector of regression coefficients to be estimated
ε i = the error terms
Logistic regression assumes meaningful coding of the variables. A logistic coefficient is difficult
to interpret if not coded meaningfully. The convention for binomial logistic regression is to code
the dependent class of interest as 1 and the other as 0.
Assumptions of Binary Logistic Regression
Unlike general linear models, binary logistic regression does not have many key assumptions;
particularly it does not require a linear relationship between the dependent and independent
variables, normality of the error distribution, homoscedasticity of the errors and measurement
level of the independent variables. (http://www.statisticssolutions.com/assumptions-of-logistic-
regression/) however, logistic regression still requires other assumptions.
1. Binary logistic regression requires the dependent variables to be binary.
29
2. Since binary logistic regression assumes that that P(Y=1) is the probability of event occurring,
it requires that the dependent variable is coded accordingly.
3. Model should be fitted correctly. It means that all meaningful variables should be included.
Also, it should not be over fitted with meaningless variables included.
4. Binary logistic regression requires each observation to be independent. In addition, it should

have little or no multicollinearity, which means that independent variables are not linear
functions of each other.
5. Binary logistic regression requires linearity of the relationship between independent variables
and log odds. Meanwhile, it does not require a linear relationship between dependent and
independent variables.
6. Binary logistic regression requires quite large sample sizes. Studies with small sample sizes
overestimate the effect measure. Also, the more independent variables are included in the model;
the larger sample size is required.
Maximum Likelihood Estimation
Although logistic regression model looks like simple linear regression model, the underlying
distribution is binomial and α and β parameters cannot be estimated in the same way as for
simple linear regression. The coefficients are usually estimated by the Maximum Likelihood
Model (Park, Hyeoun-Ae, 2013). The likelihood is a probability to get observed values of the
dependent variable given the observed values of independent variables. The likelihood varies
from 0 to 1 like any other probabilities. The probability estimation of the dependent variable as
applied by Gujarati: (2004) can be represented by;
Prob (Y i=1)=F ( β ' X i)…………… (2)
Prob ( Y i=0 )=1−F (β ' X i)…………… (3)
Where:
Y i= {0if1 if−HH
−HH partcipated
not partcipated
………….. (4)
30
The probability model involves regression of the conditional expectation of Y on X as given by:
E ( Y |X )=1 [ F ( β X ) ] +0 [ 1−F ( β X ) ]=F ( β X )……….. (5)

' ' '
The F-function represents that the logit model uses a logit cumulative distributive function.
When an outcome variable is dichotomous or binary, the relationship between variables may be
nonlinear and can be converted into linear ones through logarithmic transformation. Therefore,
the logit regression equation from which the probability of the outcome variable (Y) is predicted
is given by:
β' X
e
P(Y =1∨X )= ……………….……… (6)
'
1+e β X
( | ) eβ ' X 1
P Y =0 X =1− βX
= ' ……………….. (7)
'
1+ e 1+ e β X
Where: P(Y) = the probability of Y occurring as defined in equation (4)
e = the base of natural logarithms
The logit regression in equation 6 and 7 are expressed in logarithm terms and overcomes the
problem of nonlinearity. The result of the logit regression varies between 0 and 1: values closer
to 0 indicates that the outcome variable (Y) is unlikely to have occurred and values closer to 1
indicate the probability of Y occurring is very high.
The output of the logit regression model explains the probability that the outcome variable (Y)
changes when the independent variables change. Thus, a positive logit coefficient tells us that a
change in the independent variable (X) increases the probability that (Y=1). A significant
coefficient indicates that the positive effect is statistically significant. However, the logit
coefficient does not tell us by how much percentage the probability of (Y=1) change when the
explanatory variable (X) changes by one unit. The logit coefficient shows the direction of the
change not the magnitude of the change. The magnitude of the effect would be estimated by
calculating the marginal effects.
31
According to Gujarati: (2004)
∂ E [ Y i∨X i ]
=F(β ' X ) [ 1−F (β ' X ) ] β ……………… (8)
∂ Xi
It indicates how much percent the probability of (Y=1) changes when the X covariates change by
one unit. STATA software version 14 has an inbuilt system to compute the coefficients of the
logit function and the marginal effects.
3.8.2. The impact of low cost housing development on urban poverity status
3.8.2.1. Propensity score matching (PSM)
In analyzing the impact of low cost housing development on urban household poverty status the
method of matching based on propensity scores was applied. The PSM was applied based on two
assumptions: first the Conditional Independence Assumption (CIA) that is the key assumption
made in PSM is that selection into a program can be captured with observable data that are
available to the evaluator. (Y0, Y1) ⊥I | X, where Y0 shows the outcome of the control groups, Y 1
shows the outcome of the treated group, I was showed the participation into the program, and X
showed the set of pre-treatment explanatory variables. Thus, based on Rosenbaum and Rubin
(1983) using their assertion that ‘treatment assignment is strongly ignorable’, displayed that, for
non-randomized observations, outcome and treatment are conditionally independent given the
propensity score, P(x), (Y0, Y1) ⊥ I|P(x). That is a balancing condition needs to be satisfied for
propensity score matching. T ⊥ X | P(x).
Secondly, the common support or overlap condition: 0 < P (I i = 1|Xi) < 1. According to Heckman
et al., (1999) suggestion this assumption ensures that the treatment observations have comparison
observations “nearby” in the propensity score distribution. Thus, in order to estimate the real
impact of outmigration on households’ income propensity score matching is employed since
OLS could not control the selection bias of the treatment and this model had this merit.
Assignment to participate on low cost housing development in the study area purposively done,
owing to this mode of assignment, the PSM framework adopted for estimating the impact of low
cost housing development urban household poverty status. Impact through this outcome variable
was obtained by matching an ideal comparative group (non-own house families) to the treatment
group (own house families) based on propensity scores (P-scores) of X. X is the set of
32
observable characteristics that determine low cost housing development. By so doing, the
selectivity bias largely was eliminated.
To develop the PSM framework, let Y i was the outcome variable of household i, such that Y 1i
and Y0i denote household outcomes with and without access to house respectively. A dummy
variable Ii denotes housing access by household i, where I i = 1 if the household has access to
housing families and, I0 = 0, otherwise. The outcome observed for household i, Y i, defined by the
switching regression (Quandt, 1972).
Y i=I i Y 1i +(1−I i)Y oi … … … … … … … … … … … … … … … … …(1)
The impact of impact of low cost housing development urban household poverty status was
given by;
∆ i Y i =Y 1i −Y 0 i … … … … … … … … … … … … … … … … … … …....(2)
Where, ΔiYi denotes the change in the outcome variable of household i, resulting from access to
housing families. A household cannot be both ways, therefore, at any time, either Y1i (own house
families household) or Y0i (non-own house families household) is observed for that household.
This gives rise to the selectivity bias problem (Heckman et al., 1997). The framework assumes
heterogeneity in impacts of outcomes. The heterogeneity assumption is important because, not
practically all households with access to house families can benefit equally results of differing
characteristics. The most commonly used evaluation parameters are averages (Heckman et al.,
1997). Two means are common in the impact analysis framework, the average treatment effect,
(ATE) and the average treatment effect on the treated (ATT). In the case of low cost housing
development, ATE estimates the effect of low cost housing development on the outcomes of the
whole population without regards to own housing but the ATT estimates, low cost housing
development effects conditional on access to housing family. It is the latter, which this study
seeks to estimate and it represented as
ATT =[ E(∆i │ I i =1) ]=E [ Y 1i −Y 0 i │ I i =1 ]=E [ Y 1 i │ I i=1 ] −E [ Y 0 i|I i =1 ] … … …(3)
From equation (3), E[Yoi /I=1] is the missing data representing the outcomes of low cost housing
development participants in the absence of own housing family. One way to estimate this
33
missing data is to use outcomes of non-own housing families. By using the outcomes of a non-
own housing families, (3) can be rewritten
[ E( ∆i │ I i=1)]=E [ Y 1 i|I i=1 ]−E [ Y 0 i|I i =1 ] … … … … … … … … … … … … … ..(4)

Without controlling for the unobservable heterogeneity, (4) shown to consist of
a bias in addition to the impact estimate. Subtracting and adding E [Y oi /I=1] to the right hand
side of (4) gives;
¿ E [ Y 1 i │ I i =1 ] −E [ Y 0 i │ I i =0 ]−E [ Y 0i|I I =1 ] + E [ Y 0 i|I i =1 ] … … … … … … … … …(5)
¿ E [ Y 1 i−Y oi │ Ii=1 ] + E [ Yoi|Ii=1 ] −E[Yoi │ Ii=0 ]
Bias
Rearranging (5) gives,
¿ E [ ∆ i │ I i=1 ] + { E[Y 0 i|Ii=1]−E [Y 0 i │ I i=0] } … … … … … … ..(6)
Thus, a bias of the magnitude shown in (6) results when non-own housing families are selected
for comparison with own housing families, without controlling for the nonrandom own housing
families assignment (Cobb-Clark and Crossley, 2003; Ravallion, 2005).
The PSM method takes care of the bias, so that estimated low cost housing development impact
is largely consistent. The method identifies and matches households within the own housing
family’s households that are similar in observable characteristics Xi, to those of the non-own
housing family’s households. This can be done by deriving propensity scores from a binary logit
estimation of low cost housing development participation model (Dehejia and Wahba, 2002). A
binary logit model represented as,
34
1
Pr ( I i=1| X )= − βx
= pr ( x ) … … … … … … … … … … … …(7)
1+e
Where X is a vector of explanatory variables including household demographic and socio-

economic characteristics, which deemed to influence access to outmigration, Pr (X) is the
propensity score. Based on the propensity scores of own housing families households and non-
own housing families households , the nearest neighbor matching and Kernel matching method
was used to select the best non-own housing families households for the own housing families
household’s. Rosenbaum and Rubin (1985) opine that, since exact matching is rarely possible, an
issue of closeness must consider. Matching therefore uses the expected outcomes of the own
housing families (with low cost housing development access), conditional on the propensity
scores to estimate the expected counterfactual of the non-own housing families households
(Cobb-Clark & Crossley, 2003).
{ E [ Y 0i ] , I i =1, X i=¿ x }= { E [ Y 0 t ] , I t =0 , X t|¿ x } … … … … … … … .8

The “conditional independence” or “exogeneity” assumption must hold for this relation to be
true. Rosenbaum and Rubin (1985) showed that once appropriate common support established
the conditional independence assumption becomes valid. They proved that, if outcomes without
own housing families (Y0i) are independent of participation in own housing families (I i) given Xi
= x, then participants are also independent of participation (Ii) given their propensity scores
[P(X)]. In PSM low cost housing development, participation characteristics used to estimate a
single value (P-score) which serves as the basis of comparison rather than the characteristics
themselves. The latter could be very laborious; hence, PSM solves the “curse of dimensionality”.
Once common support is established for the own housing families households, the heterogeneous
impact (ATT) of own housing families on household poverty status can then be estimated using
Equation (9).
Thus the relation holds, only when the assumption of closeness of propensity scores is valid
(common support assumption).
1 1
ATT =[ E ( ∆ i|I t =1 ) ] = ∑ ( Y 0 i ) I i= ∑ ∆ i I i … … … … … … … … … … …( 9)
It Ii
35
Nearest Neighbor Matching (NNM)
A case in the control group matched to a treated case based on the closest propensity score. Each
person in the treatment group chooses individual(s) with the closest propensity score to them.
The radius matching is to use not only the closest NN within each caliper, but all the individuals
in the control group within the caliper.
Kernel Based Matching (KBM)
The KBM uses weighted averages of all cases in the control group to estimate counterfactual
outcomes. The weight calculated by the propensity score distance between a treatment case and
all control cases. The closest control cases given the greatest weight. Each person in the
treatment group matched to a weighted sum of.
Caliper and Radius Matching
NN matching faces the risk of bad matches, if the closest neighbor is far away. This can be
avoided by imposing a tolerance level on the maximum propensity score distance (caliper).
Applying caliper matching means that those individual from the comparison group chosen as a
matching partner for a treated individual that lies within the caliper (‘propensity range’) and is
closest in terms of propensity score. A benefit of this approach is that it uses only as many
comparison units as are available within the caliper and therefore allows for usage of extra
(fewer) units when good matches are (not) available. Hence, it shares the attractive feature of
oversampling mentioned above, but avoids the risk of bad matches.
3.8.2.2. Sensitivity Analyses for Selection on Unobservable

The Conditional Independence Assumption (CIA) is a basic assumption to identify the true
treatment effect in the ATT estimation strategy. While the validity of the CIA cannot test, using
non-experimental data there are some methods that help to assess the sensitivity of the baseline
estimates to violations of the CIA [Crinò, 2011].
In this study, the approach designed by Ichino et al. [2008] was adopted to assess violations of
the CIA. The approach relies on the hypothesis that assignment to treatment may be confounded
given the set of observable variables but it is un confounded given observed and an unobservable
variable, U.
36
Pr [D=1│Yi T, Yic, X, U] =Pr [D=1│X, U] ...………………………………………… (1)
This approach assumes the CIA to violate by the incidence of an unobserved binary variable U ϵ
{0, 1}. The approach tries to assess the sensitivity of the point estimate of the ATT to changes in
a small set of parameters that characterize the relationship of U with treatment and outcome.
More formally, the distribution of the unobserved binary confounding variable U derived by
specifying the parameters
[𝑼=𝟏|𝑫=𝒊,𝒀=𝒋,𝑿]=[𝑼=𝟏|𝑫=𝒊,𝒀=𝒋]≡𝒑𝒊𝒋……………………………………….…(2)
with i, j ϵ {0, 1}, which correspond to the probability that U=1 in each of the four 1 groups
defined by treatment status Di and outcome Yj [Millamaci & Sciulli, 2011]. In order to simulate
a “dangerous” confounder [i.e., a confounder that represent a real threat for the baseline
estimate], Ichino, Mealli and Nannicini [2007] argue the following implications should hold
𝒑𝟎𝟏>𝒑𝟎𝟎⟹[𝒀𝒊𝒄=𝟏|𝑫=𝟎,𝑼=𝟏,𝑿]>𝑷𝒓[𝒀𝒊 𝒄=𝟏│𝑫=𝟎,𝑼=𝟎,𝑿] ……………………...(𝟑)
𝒑𝟏>𝒑𝟎. ⟹𝒑𝒓[𝑫=𝟏|𝑼=𝟏,𝑿]>𝑷𝒓[𝑫=𝟏|𝑼=𝟎,𝑿]…………….…………….…………….…(𝟒)
As a result, assuming p01 > p00 a confounding factor that has a positive effect on the untreated
outcome YiC (conditioning on X) can be simulated. Likewise, by assuming p1 > p0. A
confounding factor that has a positive effect on treatment assignment D (conditioning on X) can
also be simulated.
Γ≡Σ1𝑅𝑅𝑟=1 [𝑃𝑟(𝑌=1|𝐷=0,𝑈=1,𝑋)/𝑃𝑟 (𝑌=0│𝐷=0,𝑈=1,𝑋)𝑃𝑟(𝑌=1|𝐷=0,𝑈=0,𝑋)/𝑃𝑟
(𝑌=0│𝐷=0,𝑈=0,𝑋)]……………………………………………………………………….. (5)
Λ≡Σ1𝑅𝑅𝑟=1 [𝑃𝑟(𝐷=1|𝑈=1,𝑋)/𝑃𝑟 (𝐷=0│𝑈=1,𝑋)𝑃𝑟(𝐷=1|𝑈=0,𝑋)/𝑃𝑟 (𝐷=0│𝑈=0,𝑋)]
………………...……………………………………………………..…... (6)
Where R indicates the number of replications, Г represents the outcome effect and Λ stands for
the selection effect.
Ichino et al [2008] argued that if U is simulated by setting p01 > p00 and p0 > p1, both the
outcome and selection effects must be greater than unity [i.e. Γ > 1 and Λ> 1). Therefore, they
concluded if only “implausible” confounders drove the ATT either to zero or far away from the
baseline estimate that the sensitivity analysis would support the robustness of estimated results.
3.9. Statistical and Model Specification Tests

In the context of cross sectional data specification test of the model could reflect tests for
heteroscedasticity, multicollinearity, and model specification errors. Because the distributional
assumptions are typically crucial for the consistency and efficiency of the maximum likelihood
37
estimator, it is recommendable to test these assumptions first (Verbeek, 2004). Accordingly, the
following tasks were undertaken before the actual estimation of coefficients and hypothesis tests.
I. Model specification error test

In developing an empirical model, one is likely to commit one or more of the following
specification errors such as Omission of a relevant variable(s), Inclusion of unnecessary
variable(s), adopting the wrong functional form, Errors of measurement and Incorrect
specification of the stochastic error term among other model specification errors (Gujarati, 2004)
Omission of relevant variables results biased as well as inconsistent estimates, hypothesis-testing
procedures are likely to give misleading conclusions. Inclusion of an unnecessary variable results
unbiased and consistent estimates. However, the estimators will be generally inefficient, leading
less precise inference about the parameters estimated. The test for omitted variables involves
similar procedure. Based on these criterions if the results do not look encouraging, the value is
too low, very few coefficients are statistically significant, or have the incorrect signs, then we
can doubt about the adequacy of the model and look for remedies. Accordingly, model
specification error tests were undertaken.
II. Heteroscedasticity Test
Heteroscedasticity arises if different error terms do not have identical variances. One of the
important assumptions of the classical regression model is that the variance of each disturbance
term, conditional on the chosen values of the explanatory variables, is some constant number
equal to. This is the assumption of homoscedasticity of equal speared (or equal variance) of the
error terms.
Symbolically,
(𝑈𝑖2)=𝛿2……………………………………………………………………………………(1)
However, if the distribution of , around the explanatory variables does not have a constant
variance we say that are heteroscedastic to mean that the variances of are variable or not
constant. There are several reasons why the variances of may be variables, some of which are
error-learning models, presence of outliers, and incorrect specification of the model. This will
lead to estimating inefficient estimators. Thus, standard test statistics will be invalid and
38
inferences will be misleading. Therefore, in order to avoid such problems the test for
heteroscedasticity was done using Spearman rank-correlation test it is the simplest test for
detecting heteroscedasticity, White’s General Heteroscedasticity Test (White‘s test.
The statistics test can be summarized as:-
𝑛.𝑅2=𝑋2𝑑𝑓……………………………………………………………………………………2
Where n is sample size, is coefficient of determination, which is obtained from the auxiliary
regression. This follows the chi-square distribution asymptotically with degree of freedom equal
to the number of independent variables in the auxiliary regression.
III. Multicollinearity Test

Multicollinearity refers to the existence of linear relationship among explanatory variables in a
given model. Multicollinearity problem could arise from data collection method employed,
constraints in the population, presence of more explanatory variables than number of
observations, and problem of model specification. According to (Gujarati, 2004), in cases of near
or high multicollinearity, one is likely to encounter, among others, larger variances and
covariance, making precise estimation difficult. The speed with which variances and covariance
increase can be seen with the Variance Inflating Factor (VIF), which is defined as:-
𝑉𝐼𝐹𝑖=11−𝑅𝑖2……………………………………………………….………………..3
Where is coefficient of determination obtained by regressing over other explanatory variables.
As a rule of thumb, if the VIF of a variable exceeds 10, which will happen if exceeds 0.90, that
variable is said to be highly collinear. This test was used for continues explanatory variables. In
order to see the degree of association between categorical and continues explanatory variables
Contingency Coefficient (CC) was used. It is given by:
𝑪𝑪=√𝑿𝟐𝒙𝟐+𝑵…………………………………………………………………… (4)
Where Chi square and N is total sample size. CC 75 shows existence of strong relationship
between explanatory variables. IV. Model goodness of Fit: it was done by using (Hosmer, 2013)
test of goodness
3.10 variables and working hypothesis

39
Dependent variable: Participation in low cost housing development: A binary variable taking a
value 1 if the household having participated and being home owner and 0 otherwise. This
conditional probability to participate was measured using logit model.
Outcome variable
Poverty status (being poor or not after the intervention of low cost housing)
This study was focused on estimating household poverty status by considering impacts of low
cost housing as an intervention, through monetary measures the consumption approach at
household levels because is most widely used when measuring poverty. Common practice starts
by identifying a single monetary indicator of household poverty status. This tends to be either
total expenditure or consumption or total income over some period. Income or consumption can
be defined in many ways, some far preferable to others and it is widely agreed (Ravallion, 1992).
Households with per capital consumption expenditure less than the poverty line will be consider
poor and those with costs greater than the poverty threshold will be consider non-poor ( for this
study the researcher gives the value 1 for not poor, and 0 for poor after calculating the
expenditure of household’s).
Independent (Explanatory) variables
Gender: - In most studies it was observed that the female headed households have to be less
likely to have property by their status. It have to be expected that the male headed household has
more probable to have own housing and more likeable to participate under the low cost housing
development.
Age: - Age of the household has a significant effect for the productive stag of human being. As
the age approaches to the middle and in between of old age the motion of working habit and
imitation to possess something for own have to be increased. So as increasing the age it tends to
more belongs to have own house. This is because younger individuals living on their own
typically rent, while middle-aged and older individuals typically own their homes (Hilber, 2007).
40
Marital status: - being couples and have children leads to have more intention to having own
house relating with freedom, psychological stress, and growing up of children. Couples with
children presumably desire ownership because of their greater need to (or welfare from) adapt
their homes when there are children in the family (Lauridsen and Skak, 2007).
Family size: - it has a positive relation with participating in low cost housing development and
later on having own house. Lim et al., 1980, also affirmed that on average, doubling the
household size, with other things being equal, will increase the probability of having own house.
Educational status:- households with their higher educational status and career will have to
deemed respected dignity like having moderate standard of living, expected income, and own
house. It will have a positive relation with participating under low cost housing development.
Study conducted by Tan, 2008, found that households with a higher education background,
where careers tend to be more established, have high valence on most of the homeownership
externalities.
Monthly income: - An increase in the monthly income of the respondents will associated with
an increase in the probability of becoming a homeowner. In this regard, a study conducted by
Hilber, 2007, disclosed that the household income and household (and perhaps parental) wealth
are expected to have a significant impact on individual homeownership outcomes because
income and wealth help overcome barriers.
Saving practice: - The habit of saving enables to households having potential to plan out and
deserve certain activity. In many case for running where as simple and complex project
predominantly saving has prior question for starting up of such project. It will have a positive
effect for the participation of low cost housing development.
Loan access: - The probability of obtained loan from particular finance sector will be guaranty
for sustain project implementation at a time. Especially for those who do not have financial
support in any case of sector the loan accessibility is important. It will have to positive relation
with participating in low cost housing development.
41
Land condition: - Land constitutes a significant proportion of the total cost of financing
incremental housing construction process and access to low cost land is very essential in making
the progressive housing development process viable. Access to land determines how land is
made available for residential development to all income groups. It will have to positive relation
if land is owned for low cost housing development.
Availability of building material: - The availability of building material can have a positive
relation for the facilitating building of house. It can make the cost be minimized as it appears in
very extent manner, whereas the shortage availability of building material can make a single
material to have expensive price, and reduce the participation of low cost development at a
certain place. Building materials constitute the largest single input in housing construction.
While Adedeji(2010) observed that about sixty (60) per cent of the total housing expenditure
goes for the purchase of building materials, Arayela (2005) averred that the cost of building
materials constitute about 65 percent of the construction cost.
Cost of land: -Land is a key factor of production. Access to land is a critical element in
providing low income housing (UN, 1984). The supply of land is very limited coupled by the
need to for it as a public utility for low cost housing, makes it very scarce. Consequently there is
a growing class of landless whose access to land and shelter is becoming more difficult every
day. The cost of land expected to have inverse relation with the involvement of low cost housing
development.
Availability of infrastructure:-waste sewerage, electricity, networked road, are among the

infrastructure which has great effects for facilitating building of house and later on adequate
housing.it will have to expect a positive effect on low cost housing development. Development
of supporting infrastructure is a critical component of the realization of the right to adequate
housing. Urban development investment has been largely uncoordinated, with responsibility
being spread among too many institutions, including local government, sector ministries, quasi-
private companies and utility services (Hakijamii 2012).
42
3.11. Ethical considerations
Participants of the study were informed about the objectives of the study emphasizing that the
data were used only for the academic purpose. The data were collected using questionnaire
techniques and doing with the full consent of the participants. A statement that clearly indicates
their participation is only on a voluntary basis and they were advised not to include their names
and address on the questionnaire. In addition, focus group discussion with respondents was
conduct upon their willingness and full collaboration. Careful attention was given in respecting
the rights, needs, and values of the participants; and maintaining confidentiality of the data and
acknowledging sources of information.
43
Table 2:- Variable definition, measurement and expected effect on independent variables
Variables Types Measurement Expected

sign
Age of the HHH** Categorical 18-29 years old +/-
30-40 years old
41-50 years old
Above 51 years old
Gender of HHH Dummy 0=Female, 1=Male +/-
Marital status of HHH Dummy 0=if single, 1= if married -
Household size Continues +
Education of HHH Categorical 1 illiterate, 2 primary school, 3 +
secondary school, 4 diploma, 5
degree and above
Household income Categorical < 3500 Birr +
3501-5500 Birr
5501-7500 Birr
7501-9500 Birr
> 9501 Birr
Employment sector of Categorical Own business +/-
HHH Government employee
Private organization employee
Unemployed
Saving practice Dummy 1= yes = 0 = no +/-
Land condition Dummy 1 = own 0= not own +
Infrastructure Dummy 1 = yes +
development 0 = no
Cost of land Dummy 1 = reasonable price 0= expensive -
price
Availability of building Categorical 1 very great extent, 2 great extent, 3 +
material moderately extent, 4 less extent, 5
no extent
44
CHAPTER FOUR
RESULTS AND DISCUSSION

4.1. Introduction
The total target population was 2198. Participant in low cost housing development and being
have own house were 1476 and non- participant (low cost house project non- owners were 722.
This chapter presents the results and discussion of the study. The first section presents result of
the descriptive analysis like the respondents’ characteristics include socio- economic and
institutional factors that influence participation of low cost housing development. The second
section deals with the discussion of the econometric model outputs. In this section determinant of
low cost housing development participation, impact of low cost housing participation on
households’ poverty status were presented by using econometric models in STATA 14.
The household questionnaires (from April first up to April 15, 2020 for half month) which
covered economic activity, demographic data, housing situation, sources of income, and
employment, and monthly expenditure (education, rent fee, health, food and non-food) during
the last one year. Data collecting period spend 2 weeks including enumerator orientation.
4.2. Poverty line calculation
The poverty line for each privately house rented households and low cost house owner
households were obtained by adding the total expenditure spent on rent fee, education, health,
food and non-food, for each of the sampled households. The amount divided for family members
here is the assumption of all age group and gender of family members consume equal amount
and the same expenditure, which used as a measure of poverty status. International poverty line
set at $1.9 per capital per day for underdeveloped world World Bank, 2017 which is approximate
1880 Ethiopian Birr per month converted into the current official exchange rate (1$ = 33 Birr). A
family who had per capital expenditure was below its poverty line categorized as being poor and
that that is per capital expenditure was higher than its poverty line classified as non-poor.
4.3. Descriptive analysis of survey data

4.3.1. Socioeconomic characteristics of the respondents
45
Sex of respondents: Gender is one of the important variables that affecting the households’
decision towards participation of low cost housing development. In the study area, the head of
the household generally is responsible for the co-ordination of the household activities. Sample
respondents were composed of both male and female household heads. It was found that among
the total sample respondents 61.6% were male and the remaining 29.4% female. From the
participant’s respondents 76.4% and 23.6% of them were male and female households
respectively. Whereas, the non-participant respondents gender composition were 31.6% and 68.4
% of them were male headed and female-headed households respectively. The survey result
revealed that there was significant difference at 1% significant level between male and female-
headed household with respect to sex of household heads that, male-headed households are more
participant than female headed ones which is in line with the prior hypothesis.
Age of respondents: In this study, sample respondents’ age ranged from 18 to 51 years. The
majority of respondents 39.1% were ranged between 41-51 years followed by the aged group of
18-29 years. The chi-square test for the distribution of age between the two groups was found to
be insignificant.
Marital status: With regard to the marital status, from the total sample respondents 73.75% and
26.25% were married, and single, respectively (Table). From the participant of low cost housing
development 21.7% and 78.3% of respondents were single and married respectively, whereas
from the non-participant respondents, 35.4% and 64.5% were married and single respectively.
The survey result revealed that there was significant difference at 5% significant level between
single and married household respondents, households with respect to marital status whose have
found to be married were more participant than single which Is similar with previous hypothesis.
Educational level of the respondents: Education is a very important in determining

participation of low cost housing development. An educated person has to be claimed that to live
with at list substandard basic needs like housing. As a person gets more educated the passion of
life would like to standardize than the illiterate group. As we can observe in the table below most
probably the participant respondents in low cost housing development have found to be diploma
and above in their education level. Whereas the non- participant has found to lower amount in
46
accomplishing secondary school and getting diploma and above certificate. The chi-square test
for the distribution of education level between the two groups was found to be insignificant.
Income size: The monthly income of the respondents indicated that a majority of the participant
households 42.8% fell in the income ranges of 5501ETB-7500ETB, followed by having an
income of greater than 95ooETB. From the non-participant respondents has fell in the income
range of, 3500ETB. The result of chi-square shows statistically significance at 5% level. It
reveals that the participation level has to be greater on those of households who have greater
income category than those of non-participant; it has to feet with the previous hypothesis
Employment sector: Regarding their occupations, a majority of the respondents were doing
own business 36% , government employee 29%, and NGO’s 20.4% whereas a nearly equal
number of respondents were employees of private organizations 8.2, and 5.4% were
unemployed. From these mostly the participant respondents of low cost housing development
48.9%, 34.4% 27.3%, were doing their business, NGO’s employee, and government employed.
The majority respondents of non-participant were grouped under private organization sector
employee and unemployed compared with participant. The survey result revealed that there was
significant difference at 1% significant level between employment sector of household
respondents, households with respect to employment sector whose have found to be doing own
business were more participant than other group employment sector which Is similar with
previous hypothesis.
Loan access: Many of the respondents were not obtained loan access due to the presence of huge
brucracy in the financial institution, and absence of independent finance sector which does give
the services particularly for the housing development at inclusive level.71.3% of respondents
were not obtained loan, whereas 28.3% had got loan. The chi-square result was found to be
statistically significant at 5% level of significance, and hence it revealed that there is statistically
difference among the groups for the participation of low cost housing development.
Land condition: Land is a key factor of production. Access to land is a critical element in
participating low income housing (UN, 1984). A majority of the non- participant on low cost
housing development (77.5%) have not owned land than those of the participant (75.8%) and
47
the result of chi-square shows statistically significance at 5% level. It reveals that the
participation level has to be greater on those of households who have land own than not own.
Infrastructure development: Development of supporting infrastructure is a critical component

of the realization of the right to adequate housing development. The development of
infrastructure has to more favor effect on the attraction of particular places for residents, has to
minimize the costs due to offering resources for low cost housing development. Here
respondents were requested whether there is infrastructure development here to facilitate the
housing development or not, and the majority of respondents who have participating in the low
cost housing development 72.7t% revealed that there is an infrastructure development access.
The result of chi-square test also revealed it has to be statistically significant at 5% level.
Availability of land: Land constitutes a significant proportion of the total cost of financing
incremental housing construction process and access to low cost land is very essential in making
the progressive housing development process viable. Respondents were requested to response
that in what level of extent that availability of land impacts on participation of low cost housing
development, and majority of respondents 40%, were suggested that it were very great extent,
and 20% of them responded as great extent. The chi square result was not being found as
significant.
Cost of land: The supply of land is very limited coupled by the need to for as a public utility for
low cost housing, makes it very scarce. Consequently there is a growing class of landless whose
access to land and shelter is becoming more difficult every day.it makes cost of land to be
questionable. The result of chi-square revealed it as it has to be found statistically significant at
1% level. It shows that the cost of land matter on the participation of low cost housing
development. Majority of participant 68.3% response that the cost of land to be reasonable price,
whereas at the time non- participant got it as expensive price. The cost of land was matter on the
participation of low cost housing development.
Saving practice: The result produced from the chi-squared test revealed that most of the
participant (61.5%) were able to save money, while a majority of the non-participant (67.1%)
never practiced saving, and the result was statistically significant at 1% level. it shows that the
48
households who have saving practice has greater tendency on the participation of low cost
housing development.
Table3:- Summary of descriptive statics for discrete variables for low cost housing participation
Value None Total sample
participant
participant
N % N % X2 N %
Gender Male 25 31.6 123 76.4 44.893*** 148 61.6
54 68.4 38 23.6 92 29.4
Female
Age 18- 29 23 29.1 49 30.43 4.972 72 30
21 26.6 37 22.9 58 24
30- 40
41- 50 23 29.1 63 39.1 86 36
12 15.2 12 7.63 24 10
Above 51
MRTS Single 28 35.4 35 21.7 5.141** 63 26.25
51 64.6 126 78.3 177 73.75
Married
EDU Illiterate 21 26.5 42 26.1 0.3007 63 26
LEVEL Primary school
6 7.6 16 10 16 6
Secondary school 9 11.4 21 13.04 30 12.5
Diploma
28 33 56 34.8 84 35
Degree and above 15 19.5 32 19.16 47 19.5
EMP- Ownbusiness 10 12.7 78 48.4 39.365*** 88 36
SEC Govt employ
26 32.9 44 27.3 70 29
Private orgn 15 18.9 5 6.33 20 8.2
NGO employ
22 27.8 27 34.17 49 20.4
Unemployed 6 7.6 7 4.3 13 5.4
Income- < 3500 ETB 10 8.9 5 3.1 12.948** 15 6.3
8 1.01 18 11.2 26 10.8
size 3501-5500
5501-7500 32 40.5 69 42.8 101 42
7501-9500
24 30.4 53 32.92 77 32
>9501 ETB 5 6.33 18 11.18 23 9.2
Loan Obtained 20 25.3 48 29.8 5.783** 68 28.3
59 74.7 113 70.2 172 71.7
access Not obtained
49
Variable Value None Total sample
name participant
participant
N % N % X2 N %
Land Owned 18 22.78 122 75.78 5.785** 140 58.3
Not own 61 77.22 39 24.22 100 41.6
Availability of V. great extent 29 36.71 67 41.5 96 40
land
Great extent 18 22.78 32 19.9 0.7775 50 20.8
Moderately extent 14 17.8 30 18.6 44 18.4
Less extent 9 11.4 16 10 25 10.4
No extent 9 11.4 16 10 25 10.4
Cost of land Reasonable price 35 44.3 110 68.3 145 60.4
Expensive price 44 55.7 51 31.7 12.753*** 95 39.4
Infrastructure Yes 30 38 117 72.7 147 61.3
development 26.888***
No 49 62 44 27.3 93 38.7
Availability of v. great extent 25 31.6 84 52 109 45.4
building
material
Great extent 29 36.7 33 20.5 15.099*** 62 25.8
Moderately extent 9 11.4 16 10 25 10.4
Less extent 12 15.2 12 7.5 24 10
No extent 4 5.06 16 10 20 8.4
Saving Yes 26 32.9 99 61.5 17.344*** 125 52
No 53 67.1 62 38.5 115 48
Source own computation from survey, 2020
Household size of respondents: In this study, sample respondents’ household size ranged from 3 to
7 families with mean household size of 4 families, and a standard deviation of 1.15. The average
household size of participant and non- participant respondents were found to be 4 and 4 families with
the standard deviations of 1.13 and 1.022, respectively. The chi-square test for the composition of
household size between the two groups was found to be insignificant.
Table 4:- Summary of Descriptive Statistics for Continuous Variables by Access to housing
Variable Non-participant participant Total sample

name
Mean St. dev mean St. dev t- value mean St. dev
HHSIZE 4 1.022 4 1.13 0.7738 4 1.15
Source; own computation from survey, 2020
50
4.3.2. Role of housing
Housing is more than physical shelter from the elements. By developing strategies around assets
like shelter it is possible to generate important non-monetary resources. Absence of housing is
one of an underlying cause of poverty through making people vulnerable to different human
capital related problem. It affects also health condition, educational attainment, future career,
child development, social relation, security, physiological makeup etc of the society. Below is an
empirical evidence of how housing interrupts the process of socio-economic decline with
comparison being made between those who are home owners and homeless or those who are
living in shanty house in marginal area.
4.3.2.1. Housing and Health

Decent house protect people from vulnerable to different sanitation related diseases through its
safe location. It is a buffer against negative shock in such a way that if one of the household
member become ill, it can be possible to divert the expenditure for house rent to medical
treatment otherwise it will lead to indebtedness. It is also an important factor for mental health
and better work performance. Below we will see the relationship of housing and health.
Table 5:- The main method of disposal of household waste and garbage
Home owner Homeless
Method
N % N %
Waste is picked up 98 60.8 15 18.1
Bury it 22 13.6 13 16.4
Dump it to waste collection site 20 7.4 6 8.6
Burn it 21 18.2 12 15.2
Other 0 0 33 41.7
Total 161 100 79 100
Source own survey, 2020
Those who participate under low cost housing development and construct their house were
requested their method of household waste and garbage disposal. 60.8% of them respond that
their waste is picked up (mainly liquid waste), 7.4% of them dump-mainly their solid waste-to
nearby public container, 18.2% of them burns their waste and 13.6% of them bury it. On the
other hand, From those who are homeless, and living without decent house 41.7% of them do
51
not have fixed waste and garbage disposal site, they mainly use nearby forest ground as toilet
and waste disposal site. These respondents are mainly the households who are living in shanty
house and mountain slide. 18.1% of them respond that their waste (mainly liquid waste) is
picked up, 8.6% of them dump (mainly solid waste) to nearby public container, 15.2% of them
burn it and 16.4% of them bury it. These households are mainly renters in private houses.
Table 6:- Type of sanitation
Home owner Homeless
Type
N % N %
In-house toilet 35 21.6 0 0
Pit latrine 126 78.4 41 51.8
Bucket latrine 0 0 0 0
Public toilet 0 0 14 17.7
Other 0 0 24 30.5
Total 161 100 79 100
The respondents were requested the type of sanitation they use. From those who construct their
house 78.4% of them use pit latrine and 21.6% of them use in-house toilet. On top of these, from
those households who are homeless 30.5% of them, mainly those who are living in marginal
area, do not have toilet-they use old stock house rooms and the forest around them as a toilet.
51.8% of them use pit latrine and 17.7% of them use public toilet, were living in privately rented
house.
Table 7:- Health problem because of sanitation
Problem Home owner Homeless
N % N %
Yes 0 0 15 31.6
No 161 100 54 68.4
Total 161 100 79 100
To see the sanitation condition of their living environment the households were requested
whether they face health problem related with sanitation. From those who construct their houses
100% of them do not face any health problem related to sanitation. Among those who are
52
homeless 68.4% of them face health problem related with sanitation and 31.6% of them did not
face. It has been created so tie unsafe living condition and increasing cost of living.
Table 8:- Reasons for the health problem
Home owner Homeless
Reasons
N % N %
Congested nature of living 0 0 44 55.7

conditions
Unsafe work condition 0 0 9 11.4
Unclean children play ground 0 0 18 22.8
Environmentally polluted 23 100 0 0
work place
Other 0 0 8 10.1
Total 23 100 79 100
To know specifically the sources of health problem, those who faced health problem with in the
last six months asked to specify the main reason for the health problem. From those who
construct their houses 100% of them responded that it was because of environmental problem at
working place. From those who are homeless 55.7% of them responded that it was because of
congested nature of living conditions, 11.4% of them respond that it was because of unsafe work
place, 22.8% of them respond that it was because of unclean children play ground and 10.1% of
them respond that it was because other reasons like work load, poverty & unsafe living place.
Table 9:- Condition of treatment
Response Home owner Homeless
N % N %
Yes 23 82.1 12 23.5
No 5 17.9 39 74.5
Total 28 100 51 100
To know whether the patient get any medical treatment or not, the respondents were requested
whether the patient get any medical treatment or not. From those who construct their houses
17.9% of them replied no, and from those who are homeless 74.5% of them answered no.
53
Table 10:- Reasons for not getting medical treatment
Reasons Home owner Homeless
N % N %
Lack of money1 8 100 28 100

Lack of know-how 0 0 0 0
Other 0 0 0 0
Total 8 100 28 100
Those who responded that the patient do not get any medical treatment again asked to specify the
reason why. Accordingly, from those who construct their houses through self-help housing co-
operatives 100% of them respond that it was because of lack of money. Among those who are
living in NGOs constructed low cost houses again 100% of them respond that it was because of
lack of money. From those who are homeless 100% of them responded that it was now also
because of lack of money.
Summary
The incidence of health problem is high on those who are homeless than home owners. The
cause for the health problem, in one way or the other, is highly related with housing. It is mostly
the result of sanitation problem and congested nature of living conditions. The chance of getting
medical treatment by the patient is also low for homeless than homeowners because of, mostly,
lack of money. Even if the patient gets medical treatment, it is through borrowing money from
other. The repayment of this loan again create great problem on the households. The type of
health service the home owners use is also better than homeless. Most of the homeless
households use health station for medical treatment since the price is low. However medical
services in health station are poor since there are a lot of patients but few physicians.
4.3.2.2 Housing and Security

Having a shelter or living in a shelter by itself does not guarantee security. But decent housing in
suitable place is an important interrupter from greater risk of crime victimization and physical
danger. This can be manifested in different ways. Decent house, which is constructed in a place
where there is no theft or crime, is a best /interrupter of asset loss or physical danger which can
lead to poverty in different ways. Decent house, which is constructed in favorable place not far
54
from the last transportation root or where transportation facility is available, is an important
place for those who work at day and learn at night to improve themselves. Because the
probability of to be vulnerable to different criminal problems is high at night than day. These
have great impact mainly on female.
Table 11:- Safety of neighborhood
Safety Home owner Homeless
N % N %
Yes 140 87 34 43
No 21 13 45 57
Total 161 100 79 100
To evaluate the safety of the respondent, they are asked whether their neighborhood is safe or
not. From those who construct their house 87% of them respond that their neighborhood is safe
and they have not experienced any crime/theft and/or other violence in the last six month where
as 13% of them respond that their neighborhood is not safe even though they have not
experienced any crime/theft and/or other violence in the last six month.. From those who are
homeless 57% of them respond that their neighborhood is not safe and they experienced theft
and they could not learn at night in fear of crime where as 43% of them are responded that their
neighborhood is safe.
Summary
The data confirmed that the safety of neighborhood is better for those who are homeowner than
homeless. The homeless are vulnerable to different crime/theft and/or violence since they are
living in less secured home or in marginal areas. This create greater negative impact on the
households in terms of loss of property and unable to improve themselves through learning at
night in fear of crime.
4.3.2.4. Housing and Human Capital Development

Home ownership is not only providing access to housing, but it also has indirect impacts that are
crucial for low–income households. More specifically, home ownership has strong indirect
impact on children development through education related achievements and future
development. Children living in substandard houses have greater probability of missing or
55
dropping out of school. Families frequent move of here and there in changing or searching home
have a strong negative impact on children school performance. Homelessness compounded with
lower income of the family and the ever increasing cost of living leads the children to enter into
the labor market to help the family. The women are also will force to enter into competitive,
dead occupation with low pay and long hours. Below there are an empirical evidences of how
housing plays an important role in human capital development.
Table 12:- Incidence of negative impact of female outside work
Response Home owner Homeless
N % N %
Yes 8 13 41 78.8
No 54 87 11 21.2
Total 62 100 52 100
To evaluate the relationship between homeownership and female development the respondents
were requested whether female member of the household work outside home to earn income or
not and again those who say yes were requested how female outside work affect them negatively.
From those who construct their house 13% of them replied yes and 87% no. From those who say
yes 40% of them respond that the work affect the female negatively where as 60% of them did
not show any negative impact. From those who are homeless 78.8% of them replied yes and the
rest 21.2% respond no. Among those who say yes 92% of them respond that this outside work
affect the female member negatively where as 8% of them replied that the work did not affect the
female negatively.
56
Table 13:- Negative impacts of female outside work
Home owner Homeless
Negative impacts
N % N %
Drop out school 0 0 31 39.2
Dead job 0 0 15 19
Social exclusion 0 0 5 6.4
Too low payment 19 100 28 35.4
Total 19 100 79 100
When they express the impact, from those who construct their house 100% of them respond that
it’s too low payment do not bring change. On the other hand, from those who are homeless
35.4% of them affected by its too low payment, 39.2% of them respond that the female forced to
drop out school, 19% of them respond that the female member become vulnerable to different
dangerous health problem since they are engaged in dead job and 6.4% of them responds that the
female face social exclusion since they are doing socially unacceptable job.
Table 14:- Reasons for children work outside home
Home owner Homeless
Reasons
N % N %
Absence of family’s monthly 0 0 32 40.5

income
Low monthly income of family 12 37.5 19 24.1
Ever increasing expenditure 18 56.3 5 6.3
Ever increasing cost of living 2 6.2 23 29.1
Other 0 0 0 0
Total 32 100 79 100
Those household who send their children to labor market were requested why they send them.
From those who construct their house 56.3% of them respond that it was because of ever
increasing expenditure, 37.5% of them respond that it was because of low monthly income and
6.2% of them respond that it was because of hardship of life. From those who are homeless
57
40.5% of them are responded that it was because of absence of family monthly income, 24.1% of
them said that it was because of low monthly income, 29.4% of them replied that it was because
of hardship of life and 6.3% of them responded that it was because of the ever increasing
expenditure.
Summary
Incidence of female members and children outside work is high for homeless than homeowners.
The reason is related with the low level/absence of family income and/or the increasing cost of
living. The negative consequences are also higher for those who are homeless than homeowners.
Among the consequences, school dropout, poor payment that does not bring any improvement
and low educational attainment are the major. Moreover, even among who are homeless and get
the chance to complete their secondary education, all of them join the labor market to help their
family. So, the probability of continuing further education after completing secondary education
is too low for those who are homeless than homeowners. This implies that when the poorest
households depend on their children’s labor as an asset, rather than invest in their children’s
future by educating them, they risk perpetuating poverty from one generation to the next.
4.3.3. Urban Poverty and Housing

One phenomenon of urbanization is urban poverty. A significant and increasing proportion of the
growing urban populations are living on low income. The higher living costs force the poor into
spending a high proportion of their incomes on basic human needs, including food, water and
housing. Housing is mainly the one which takes one of the greater share from the general
monthly expenditure of the household income especially for those who have not their own house
and living in private rental house. On the other hand both those household who are renter of
private houses and those who are living in marginal areas, since they have not money to rent a
house, are the most victim of the unbearable cost of housing poverty directly or indirectly.
Directly as a result of the increasing price of house rent, indirectly since they are unable to use
their houses as an asset and buffer against negative shock.
58
Table 15:- Summary statistics of household expenditure
Expenditure homeless
s Home owner Renters Squatters
In percent In percent In percent
Food 48 29 61
Non food 18 15 20
Education 23 21 17
Health 7 3 2
Rent 0 32 0
Total 100 100 100
The traditional “rule of thumb” was that people supposedly could afford to spend up to 25
percent of their incomes for housing without hardship. 30 percent (or even 25 percent) of their
limited income for housing does not leave them with enough money to meet their other needs
(Michael E. Stone, 2004). From the above table as we can observe it 32% of the total income of
privately rented house were expend it on rent fee, and proportionally also it indicates they have
to be expend less percent of their income for the basic needs.
4.3.3.1. Poverty status of respondents
Exceptional expenditure item of private house rented households is rent fee. The average
monthly rent expenditure of the private house rented households was Birr 1900.8 As compared
to the mean monthly income, Birr 5122.732, the households spend 32 percent of the average
monthly income. From this, it can be deduced that the households under the survey spend most
of their monthly income on rent. Significant impact of paying rent and living in private rented
house were when rented household before they are pay rent out of net monthly income only 29.5
percent of households categorized on poor or living under the poverty line but after a moment
when they paid monthly rent fee the number of poor whose people living under poverty line goes
up to 61.2 percent (other expenditures have to be adjusted to fit whatever income is left after
paying for housing).
The non-Participant under low cost housing development to have their house (Private house
rented households) were poorer than low cost house owners because extra monthly rent fee (32
percent of net monthly income) was the burden of only private house rented households. 12.1
percent of low cost house owners even under the poverty line. This implies that low cost house
59
owning are guaranteed for the long-run asset as a property, for living permanent places, self-
esteem and living freedom, the source of income and social respect but not the only reason to out
of poverty based on per capital expenditure poverty measurement. Below table also illustrates
that the chi-square test were found to be significant and show differences between the groups to
be poor and not poor respective of participating in low cost housing development.
Table 16:- summary statistics of sampled household poverty status

Variabl Value None participant Participant Total sample
e name
N % N % X2 N %
Poverty Poor 62 78.5 29 12.1 91 38
status 82.312***
Not 17 21.5 132 87.9 149 62
poor
Total 79 100 161 100 240 100
Source own computation result from survey, 2020
4.3.4. Focus group discussion results
The goals of the FGDs were disseminate by word of mouth and presentations at the challenges of
providing affordable low cost houses for private house rented households for low-income groups
meetings and discussion at places of woreda administration. The discussion was included all
woreda stakeholders (housing project officers, enforcement bodies, and political officials) being
aged 25-35 years, being willing to participate in FGDs with members, and providing an opinion.
Included eight male and one female (due to lack of enough responsive body) as who are directly
touched on the topic.
All of the respondents agreed on there were delays to narrow the gap between low cost house
demand and supply in city administration level. Results from the focus groups suggested that
precisely described challenges of providing affordable low cost houses the contribution expected
from the city administration and transparent distribution for the beneficiaries. For instance, the
woreda officials described that, in order to satisfy the demand, the city administration should be
constructing fastest than the past years. As the ideas became concrete, the city administration
60
was able to see the opportunities of community-saving money. However, in this case, the
outcome was not fully integrated, since the low cost housing project registered household's
interest and supply. This indicates that the performance must be created from the visions of
solving household poverty in order to achieve a successful development.
4.4. Result of the Econometric Model

In this part the result of multicollinearity, heteroscedasticity and model specification tests,
determinants of small-scale irrigation participation, estimation of propensity score, checking for
overlap and common support, matching algorithm, matching quality indicators, ATT and
sensitivity analyses were presented. In the first stage of the analysis, selection of matching
equations, factors affecting participation of households on low cost housing development were
identify through propensity score matching. Logit model was used for the selection equation to
identify the determinant variables for household’s decision to participate in low cost housing
development. Households poverty status were the outcome equation examined it impacts in the
second stage using propensity matching algorism. From the several independent variables of the
study, fourteen variables were incorporated for propensity score estimation.
Before taking the variables into the logistic model, some assumptions were tested among the
explanatory and dependent variables. The test results of some of the OLS assumption has been
described as follows;
Multicollinearity: before running the model, the hypothesized explanatory variables were tested
for existence of multicollinarity problem that is the situation where the explanatory variable is
highly interrelated. The variance inflation factor (VIF) shows absence of multi-collinearity
problem among the independent variable. It was concluded that, in this study, there was no
serious multi-collinearity problems among the explanatory variables, as their respective values
were less than 10 (Appendix I).
Contingency coefficients: it is a coefficient of association that tells whether two variables or

data sets are independent or dependent of each other. The decision rule for contingency
coefficients is that when its value approaches usually if it exceeds 0.75, there is a problem of
61
association between the discrete variables. In this study the contingency coefficient was less than
0.75 and it is free from multi-collinearity problem (Appendix I).
Heteroscedasticity: Brush pagan (hettest) test was employed just to detect heteroscedasticity
problem, the case in which the estimate variance of the residual from a regression are dependent
on values of the independent variables. The test results detected presence of heteroscedasticity
problem. The hypothesis for the existence of heteroscedasticity was rejected as (p=0.00).
4.4.1. Factors Affecting Participation of low cost housing development

This section describes the econometric analysis. The study aimed to examine the factors
determining participation of households on low cost housing development and its impact on
household poverty status. There are 14 potential determinants variables were examined in this
study namely: age, sex, marital status, household size, education, employment sector, income,
loan access, land condition, availability of land, cost of land, infrastructural development,
availability of building material, and saving. As indicated earlier the dependent variable in this
model is binary where the household participate on low cost housing development takes a value
of 1 and 0 otherwise. STATA version 14 computing software was used for the estimation
purpose.
Logistic regression model was employed to identify factors affect participation of low cost
housing development in the study area. The model had a log pseudo likelihood of (-100.20348)
after fifth iteration. The Wald test statistics with 14 degree of freedom is equal to 77.39, and prob
> chi2 = 0.0000 was used to test the dependence of the participation of low cost housing
development on the selected independent variables in the model (the hypothesis that all
coefficients are equal to zero is rejected at 1% significance level). The chi-square (χ2)
distribution was used as the measure of overall significance of a model in logit model estimation.
Pseudo R2 was 0.3410 which indicates of the variation between participant and non-participant
of low cost housing development explained by the variables. This low pseudo R-squared
suggests that the proposed specification of the propensity score is fairly successful in terms of
balancing the distribution of covariates between the two groups.
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The model validation statistics was also tested by (Hosmer, 2013) goodness-of-fit test after Logit
model estimation. Thus (P-value=0.8555) that the model was fitted, suggesting that the errors in
the model was normally distributed (Appendix).
Hence, the participation of low cost housing development by households was best explained by
the Logit model because the assumption of normality of the errors is supported by the goodness
of- test and statistically significant. After robust standard error estimation, show that out of
fourteen included variables in the model, eight (8) are correlated with propensity of low cost
housing development and found to have statistically significant effects on the low cost housing
development participation of the sample respondents. The binary Logit model outputs showed
that, gender of household head, Employment sector, income, loan access, land condition, cost of
land, infrastructure, and saving were found significant factors affecting the probability of
participation of low cost housing development in the study area.
Gender of household head (GEN): Difference in sex of household head influences the
participation of low cost housing development. Male headed household is more likely to
participate in low cost housing development than female headed household. Because females of
the study area as females of elsewhere have triple burden, and have violence among social
participation with non-inclusive policy measures make hinder for the participation The binary
logit model result of this study revealed that gender of household head was statistically
significant at 1% level of significance and the odds ratio revealed that, the probability of being
participating for male household head is 6.3 times greater than female household headed.
Employment sector: the work place has great influence on the amount of income earning and
be flexible in any social and economic participation of particular households. As of someone
doing his/her own business has get more freedom and earn more income which leads to have
flexible social and economic participation. This study were examined that the majority
respondents of non-participant were grouped under private organization sector employee and
unemployed compared with participant. Employment sector were found to be statistically
significant at 5% level of significant for participating in low cost housing development, and the
63
odds ratio revealed that respondents who have doing their own business has 99.3% probability of
more being participant than those who have worked in other sector and unemployed.
Income of respondent (INCOME-SZE): An increase in the monthly income of the probability

of becoming participating in low cost housing development and being homeowner. Hence, more
respondents who earn a high monthly income are participant than those who earn a low monthly
income. It has found to be statistically significant at 5% level of significance. And hence the
odds ratio implies that the more income earner group has 1.55 times greater probability on
participating in low cost housing development than the low income earner. In this regard, a study
conducted by Hilber, 2007, disclosed that the household income and household (and perhaps
parental) wealth are expect to have a significant impact on individual homeownership outcomes
because income and wealth help overcome barriers to homeownership.
Loan access: Obtaining a loan is more likely associated with the probability of becoming a
participant in low cost housing development and become homeowner. It has found to be
significant at 5% level of significance. This means as odds ratio shows households who obtained
a loan have 2.13times more probability of participating in low cost housing development than
those who did not obtain loan.
Land condition (LANCONDN): Owning land can make things as easy for constructing
housing. As it has to be main economic factors, someone who own land can participate more in
housing development and become homeowner. Here in this study it has found to be statistically
significant at 5% level of significance and has great role on the decision of participating in low
cost housing development. The odds ratio revealed that respondents who have own land have 2.6
times more probability of being participating in low cost housing development than not owned
land.
Cost of land: - it has found to be negatively affects for participating in housing. As the price of
land gets much more expensive, the probability of participating in low cost housing become
lower and lower. It is statistically significant at 1% of level of significance. The odds ratio shows
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that the more expensive price of land the probability of participating on low cost housing
development will decreased by 99%.
Saving: - It has found to be statistically significant at 1% level of significance and affects the
participation positively. The odds ratio revealed that respondents, who have saving practice, have
2.74 times greater for participating than those respondents who does not have saving practice.
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Table 17:- Maximum likelihood estimates of the logit model and odds ratio
Logistic regression Number of obs 240

Walid chi2(14) 77.39
Prob > chi2 0.0000
Log likelihood = -100.20348 Pseudo R2 0.3410
Robust Odds Ratio

PARTONHODEVT Coef. Z P>z [95% Conf. Interval]
Std. Err.
6.274
GEN 1.836418 .3748674 4.90 0.000*** 1.101692 2.571145 .917
AGE -.0863172 .1786065 -0.48 0.629 -.4363796 .2637452 1.073
M_ST -.1745619 .4192615 -0.42 0.677 -.9962994 .6471755 .839
HSIZE .0380181 .1807437 0.21 0.833 -.316233 .3922692 1.038
EDU_LEV .0701179 .0962159 0.73 0.466 -.1184619 .2586976 .744
EMP_SEC -.2952092 .1444753 -2.04 0.041** -.5783755 -.0120429 1.548
INCOME .4369359 .1921265 2.27 0.023** .0603749 .8134969 2.128
LOANACESS .755012 .3771727 2.00 0.045** .0157671 1.494257 2.574
LANDCONDIN .9455772 .4361071 2.17 0.030** .0908229 1.800331 .864
AVIALLAND -.1457133 .1335795 -1.09 0.275 -.4075242 .1160976 .403
COSLAND -.9096013 .3848603 -2.36 0.018** -1.663914 -.155289 3.129
INFRSTDEVT 1.140778 .3769852 3.03 0.002*** .4019007 1.879655 .801
BULDGMATERL -.2224826 .1469875 -1.51 0.130 -.5105728 .0656075 2.739
SAVING 1.007689 .3846074 2.62 0.009*** .2538723 1.761505 .362
_cons -1.017094 1.71619 -0.59 0.553 -4.380764 2.346576
***, and *** shows statistically significant at 1% and 5% respectively
Source own computation, 2020
4.4.2. Impact of low cost housing development on household poverty status

This section describes the impact analysis of the study and explains the entire process to arrive at
the impact of the program using propensity score matching model which included estimation of
propensity scores, matching methods used, common support region and balancing test,
calculating Treatment effect on the treated and Sensitivity analysis.
4.4.2.1. Propensity Scores Estimation
66
Propensity score matching (PSM) was applied to deal with the main objectives of the study,
examining the impact of low cost housing development on urban household’s poverty status. The
model was estimated with STATA 14 software using the propensity matching algorithm;
psmatch2 and pscore were used for the matching purpose.
Before launching the matching, the estimation of predicted values of low cost housing
development participation for all participant and non-participant households was computed.
From the propensity of participation, a common support condition was identified on the
propensity score distributions of the households with and without the program (participation of
low cost housing development). After this, observations whose predicted propensity scores fall
outside the range of the common support region was discarded and at last step sensitivity
analysis was done in order to check whether the hidden bias affects the estimated ATT or not.
4.4.2.2. Identifying Common Support Region

The propensity scores were varying between 0.1065882-0.9941071 for participant with mean
score of 0.8198758. Whereas the score varying between 0.0248673-0.9360186 was for non-
participant household with mean score of 0.2291221. The common support region was between
0.1065882-0.9941071. This means that 12 from non-participant’ households whose propensity
score less than the minimum 0.1065882 were not considered for matching (table 18 ).
Table 18:- Summary of Matching Score by Groups
Mean Std. Dev Min Max

Control .2291221 .4234398 .0248673 .9360186
Treated .8198758 .3854899 .1065882 .9941071
Total household .6447368 .479646 .0248673 .9941071
4.4.2.3. Checking for Overlap and Common Support

The propensity score ranged from 0.0248673 - 0.9941071 with a mean of 0.6447368. The
propensity score for participant household’s fall in the range of 0.1065882 and 0.9941071 with a
mean of 0.8198758 while the propensity score for non-participant households ranged from
0.0248673 to 0.9360186 with a mean of 0.2291221 The common support and overlap region for
both control and treatment groups lies between 0.1065882 and 0.9360186. Having common
support and overlap region tells us the two comparison groups can make matching. Accordingly,
67
55 households (shown by green color) from the treatment group and 12 households (shown by
red) from control group were dropped from analysis of average treatment effects. Thus, from
both 173 groups sample respondents’ data was selected in the common support region which
sufficient to estimate impact of low cost housing development.
Source: own computation, 2020
Figure 2 common support for region propensity score
4.4.2.4. Choosing Matching Algorithm

Following identification of common support region, different matching estimators (algorisms)
were tried to match low cost housing development participant with non-participant households’
in common support region. The final choice of matching algorism was guided by three criteria as
suggested by Caliendo and Kopeinig (2008); namely equal mean test (balancing test), pseudo
and size of matched sample (Table 20). Matching algorism which balances all explanatory
variables of groups (result in insignificant mean differences between low cost housing
development participant and non-partcipant), bear low pseudo R 2 value and results in large
sample size is preferable (Deheja and Wahba, 2002). Based on those criteria, radius caliper with
68
0.25 radius was found to be best estimator for this study. Therefore, impact analysis procedure
was followed and discussed by using radius caliper matching with 0.25 radius.
Table 19:-. Performance criteria of matching algorism
Performance
Matching algorism Balancing test pseudo-R2 matching sample size
kernel matching (KM)
bandwidth 0.01 19 0.120 173
bandwidth 0.1 19 0.120 173
bandwidth 0.25 19 0.120 173
bandwidth 0.5 19 0.120 173
Radius Caliper Matching(RCM)
radius 0.01 20 0.121 173
radius 0.1 13 0.056 173
radius 0.25** 10 0.043 173
radius 0.5 12 0.093 173
Nearest Neighbor Matching
Neighbor 1 18 0.160 173
Neighbor 2 18 0.160 173
Neighbor 3 18 0.160 173
Neighbor 4 18 0.160 173
**shows selected matching algorism radius caliper with radius 0.25
4.4.2.5. Testing the Balance of Propensity Score and Covariates

After selection of the best matching algorism, checking the balancing of propensity score and
covariates was done. Balance checking was done by using methods: standardized bias (SB), t-
Test, pseudo-R2 (Appendix VI).
Standard bias: One suitable indicator to assess the distance in marginal distributions of the X-
variables is the standard bias (SB) suggested by Rosenbaum and Rubin (1985). For each
covariate- X it is defined as the difference of sample means in the treated and matched control
subsamples as a percentage of the square root of the average of sample variances in both groups.
There is no clear indication for the success of the matching procedure, even though in most
empirical studies a bias reduction below 5% seen as sufficient.
69
T-test: A similar approach uses a two-sample t-test to check if there are significant differences in
covariate means for both groups (Rosenbaum and Rubin, 1985). Before matching differences are
expected, but after matching the covariates should balance in both groups and hence no
significant differences should found. The t-test might be preferred if the evaluator is concerned
with the statistical significance of the results. A similar approach uses a two-sample t-test to
check if there are significant differences in covariate means for both groups (Rosenbaum and
Rubin, 1985). Before matching differences are expected, but after matching the covariates should
be balanced in both groups and hence no significant differences should be found. The t-test
might be preferred if the evaluator is concerned with the statistical significance of the results.
Pseudo-R2: Additionally, Sianesi (2004) suggests re-estimating the propensity score on the
matched sample, that only on participants and matched non-participants and comparing the
pseudo-R2 before and after matching. The pseudo-R2 indicates how well the regressors X
explain the participation probability. After matching there should be no systematic differences in
the distribution of covariates between both groups and therefore, the pseudo-R2 should be fairly,
low. Furthermore, one can also perform an F-test on the joint significance of all regressors.
Table 20:- Balancing test of the covariates based on radius caliper matching method.
Variable Unmatched Mean %reduced t-test

Matched Treated control %bias Bias T p>t
GEN U .764 .3165 100.0 7.40 0.000
M .667 .526 32.1 67.9 2.15 0.033
AGE U 2.236 2.304 -6.1 -0.49 -0.622
M 2.255 2.307 -5.1 23.2 -0.37 0.714
EDU-LE U 3.901 3.861 2.1 0.15 0.787
M 3.906 3.739 8.8 -316.4 0.64 0.524
M_ST U 1.783 1.645 30.5 2.28 0.023
M 1.755 1.727 6.0 80.5 0.44 0.658
HSIZE U 4.248 4.139 10.4 0.75 0.452
M 4.179 4.136 4.1 60.4 0.28 0.777
EMP_SEC U 0.012 2.848 -68.2 -4.92 0.000
M 2.339 2.724 -31.4 54.0 -2.25 0.026
INCOME U 3.403 3.075 33.0 2.48 0.014
M 3.339 3.407 -6.9 79.2 -0.55 0.580
LOANACESS U .702 .545 32.8 2.42 0.016
M .642 .656 -3.0 90.8 -0.22 0.825
LANDCONDIN U .758 .607 32.5 2.42 0.016
70
M .726 .789 -13.6 58.3 -1.06 0.289
AVIALLAND U 2.267 2.379 -8..2 2.42 0.016
M 2.367 2.371 -49.7 97.6 -1.06 0.545
COSLAND U 1.317 1.557 -49.7 -3.6 0.000
M 1.406 1.392 2.8 94.3 0.20 0.839
INFRSTDEVT U .7727 .379 74.1 5.48 0.000
M .604 .547 12.1 83.7 0.83 0.408
BULDGMATER U 2.025 2.253 -17.8 -1.27 0.204
L
M 2.189 2.139 3.8 78.6 0.28 0.780
SAVING U .615 .329 59.5 4.31 0.000
M .453 .387 13.7 77.0 0.97 0.335
T-test on the hypothesis shows that the mean value of each variable the same was done before
and after matching for both treatment and control groups. After matching both groups were
found balanced no significant differences found in all covariates.
Furthermore, a bias before and after matching was calculated for each variable and the change in
this bias is stated. The balancing is good for all covariates: abs (bias) < 5% and standard bias was
not significant for all covariates.
In addition to these, the overall balancing test indicated that after matching the value of pseudo-
R2 reduced from 0.341 to 0.043, the likelihood ratio reduced from 105.15 to 12.64 and test
resulted insignificant. The average bias reduced from 3975 to 10.3 this result indicated that the
overall performance after matching was found successful.
Table 21:- Results of chi-square test for joint significance of variables.
Sample Ps R2 LR chi2 p>chi2 MeanBias MedBias

Unmatched 0.346 105.15 0.000 37.5 32.7
Matched 0.043 12.64 0.555 10.3 6.4
Therefore, the result revealed that both treated and control groups have identical distribution in
the covariates after matching and the impact of low cost housing development could be evaluated
since participants and non-participants were similar in their pre-intervention observable
characteristics.
71
4.4.2.6. Average Treatment on Treated (ATT)
In this section the econometric analysis of impact of low cost housing development on
household’s poverty status. Accordingly, the ATT was estimated using nearest neighbor, radius
caliper, and kernel matching algorithms. Average treatment on treated (ATT) estimated by radius
caliper matching algorism with 0.25 radius was selected for impact analysis as discussed section
4.4.2.5 (Table 22). The subsequent sections present the impact of low cost housing development
on household’s poverty status.
4.4.2.7. Impact of low cost housing development on Household’s poverty status

The average outcome revealed that the probability of not being poor of low cost housing
development participant was 82% and 21% for non- participant. The result indicated that on
average, participation on low cost housing development have 59.1% much greater of not being
poor than the non- participant. Similar finding with housing ownership condition was found to be
more important in predicting self- esteem and life satisfaction than income, occupation or
education Andrea L. Bentzinger and Christine C. Cook, (2009).
Table 22:- Estimated ATT of household’s poverty status
Outcome Matching Matched sample Average outcome of

variable algorism matched Std.
Treated Control Treated Control ATT error t-value
Poverty KM 161 79 .8198757 .2151891 0.617 0.102 6.078***
status RCM 161 79 .8198757 .2151891 0.591 0.083 7.160***
NNM 161 79 .8198757 .2151891 0.596 0.180 3.308***
KM = Kernel matching, RCM = Radius caliper matching, and NNM = nearest neighbor
matching
4.4.2.8. Sensitivity Analysis

The main purpose of this analysis is to check or estimate the degree at which the estimated
treatment effects were free from unobserved covariates. This could be done through comparing
baseline treatment effects and simulated treatment effects or through comparing the values of
outcome effects and selection effects generated by sensatt with the predetermined values of
outcome and selection effects.
72
According to (Ichino, 2007) outcome effect measures the observed effect of unobserved
covariates on untreated outcome while selection effects measure the effect of unobserved
covariates on the selection into the treatment. On the other hand, comparing the simulated and
base line ATT, the initial estimates were free of unobserved covariates by about 1% level of
significance for all matching methods for households’ income asset accumulation and food
security, except nearest neighbor was significant at 10% level of significance for annual income.
Indeed, in order to check the robustness of the estimated results aforementioned, sensitivity
analysis has been undertaken. In case the CIA fails in PSM it can easily solve the pitfall using
the comparison between the simulated and baseline ATTs estimates. In (Table ) and Appendixa,
Appendix b and c shows that the robustness of the baseline ATT with respect to a confounder
that is (i.e., a confounder U such that both d > 0 and s > 0). In addition to this, U is associated to
very large selection effect (Г > 1) and outcome effects (Λ > 1) for NNM, KM and RM. The
study revealed that, simulated ATT of the outcome variable which were poverty status very close
to the baseline ATTs. Hence, both values of outcome effect and selection effects were larger than
unity each, and also the difference in percentage between the baseline ATTs and simulated ATTs
was below 10% which makes it stronger in the credibility of estimated ATTs. The simulated
ATT of each of the household poverty status was too close to the baseline estimate. Obviously,
this implies that it is only when U is simulated to provide incredibly large outcome effect; the
ATT can be driven far from the baseline estimates or even closer to zero. Thus, it is possible to
conclude that impact estimates (ATT) of this study for each outcome variables were insensitive
to unobserved selection bias.
Table 23:-Simulation-based Sensitivity Analysis results.
Outcome Matching Baseline Simulated Std. error Difference Outcome Selection

variable algorism ATT ATT in % effect effect
^ r
Poverty KM 0.593 0.598 0.102 0.008 2.602 1.366
status RC 0.591 0.594 0.083 0.005 2.409 1.508
NNM 0.596 0.616 0.180 0.034 2.638 1.420
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CHAPETR 5
5. SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
One result of urban growth is the urbanization of poverty. A significant and increasing
proportion of the growing urban populations are living on low incomes. For example, more than
three- quarters of the poor in Latin America already live in cities, and many poverty – related
problems – such as a lack of secure housing, or access to water and sanitation- tend to be more
prevalent in urban than rural areas. Housing is one of the strongest indicators of human being
basic needs and has a profound effect on the quality of life, health, welfare as well as
productivity of man; in less developed countries, a large proportion of urban residents do not
have access to decent housing at an affordable cost. Ethiopia’s urban population has more than
doubled in the past 20 years, from 7.3 million in 1994 to an estimated 16.7 million in 2014
(CSA, 2013). The trend of urban areas expansion are common in the whole region of the country,
which presents a huge opportunity to shift the structure of the economic base, from agriculture
to the larger and more diversified urban industrial and service sectors. However, poor
management and planning in urban Ethiopia results in high unemployment, challenges in the
provision of infrastructures, services, and housing. The situation is not different in Dessie, since
it is part of the country.
Housing in urban takes huge expenditure and it reduces the expenditure of other basic needs. In
the study area, households with having own house have experience relatively low probability of
being poor. This study was conducted in Dessie city South wollo zone of Amhara National
Regional state. The purpose of the research was to identify the impact of low cost housing
development on urban household’s poverty status. Cross sectional data was collected in 2020 for
this purpose. The three specific objectives of the study were; to analyze the impact of low cost
housing development on urban household’ poverty status, and role of housing on urban poverty
reduction. In this study, multiple stage sampling procedure was adopted for the selection of
sample respondents. Two samples subs –cites was selected purposively based on their
participation in low cost housing. Stratified random sampling procedure applied for the selection
74
of sample households. Participating in low cost housing development and non-participant were
the main strata used for the study. Cross-sectional data were collected from 240 sample
households selected using multistage stratified random sampling techniques from this sample
161 participant’s households and the remaining 79 households were non-participant’s
households Descriptive statistics and econometric data analysis methods were employed.
The primary data collected from questioner schedule with sample respondents were analyzed
using descriptive statistics such as mean, standard deviation, percentage, and T-test. The STATA
software was used to analyze the descriptive data. Moreover, test statistics such as chi-square test
and t-test to measure significance of mean difference among the participant’s and non-
participant’s households were made. In this study a propensity score matching technique was
applied which is become most widely applied non-experimental tool for impact evaluation. It is
used to extract comparable pair of treatment-comparison households in a non-random program
setup and in the absence of baseline data. Moreover, it can adjust for selection bias and in
estimating the counterfactual effects. In this study a total of 14 explanatory variables were
hypothesized to have influence on participation of low cost housing development. Logit model
result showed that eight of the variables were significant at less than 1% and 5% level of
significance. From this explanatory variables gender, employment sector, income, loan access,
land condition, cost of land, infrastructure development, and saving practice were statistically
significant and positively influence participation except cost of land had negative effect on low
cost housing development participation.
The impact of low cost housing participation on household’s poverty status were analyzed based
on sample of matched treated and control groups. A propensity score matching approach was
used to compare participant’s households with non-participant in terms of poverty status
household’s measured by expenditure approach. Kernel matching, Radius matching and nearest
neighbor matching methods were used to estimate the impact. From these matching methods
radius caliper with 0.25 radius was selected for its matching quality. The estimated of average
treatment effect on the treated (ATT) found that participation of low cost housing had positive
impact on treated households’ poverty status (not being poor). The average treatment effects on
the treated (ATT) estimated result was obtained using PSM method and the result revealed that
75
participating on low cost housing and having own house has 59.1% of more probability of not
being poor than those who were not participated. The estimated ATT were checked for the
existence of hidden bias due to unobservable selection bias by using simulation based analysis
and the result confirmed that all estimated ATTs for household poverty status significant
outcome variable were insensitive for bias, which clearly indicates its robustness.
5.2 Conclusion
The aim of the study was to identify the impact of low cost housing development on urban
household’s poverty status. For this reason, field survey data has been used by collecting from
two sub- cities of the study area of Dessie city south wollo Zone Amhara Regional State in
Ethiopia. The study had an implicit working hypothesis that having own low cost houses has
significant impact of being not poor. In this regard, household’s consumption expenditure
approach was used for measuring household’s poverty status. To analyze the impact of low cost
housing development on urban household’s poverty status, descriptive and econometric analyses
were employed. Generally, this study has concluded low cost housing development participation
have profound impact on household’s not being poor in the study area. The specific conclusions
drawn from the study are presented below.
From the descriptive analysis no significance difference observed between the two groups in
relation to the variables age of household head, household size, education level, and availability
of land. In the other way, there was significant difference with gender, marital status,
employment sector, income, loan access, land condition, infrastructure development, and saving
practice. The PSM model results for the outcome variable annual income of household indicated
the average outcome of the matched treated and control was 82% and 22% respectively. The
average treatment effect on the treated was 59.1%. Finally the study concluded that the
probability of not being poor for participant household’s in low cost housing development had
greater by 59.1% than non- participant. Similarly, a positive and significant ATT was reported
in relation to the outcome variable food security.
The treated groups are better than the control groups significantly. The sensitivity analysis also
shows that the estimates were almost free from unobserved covariates. Consequently, it can be
76
concluded that, the overall the results were remarkably robust and the analysis support the
robustness of the matching estimates. This implies the participation on low cost housing
development has significant effect on household’s poverty status in the study area
5.3 Recommendation
Based on results of descriptive statistics and the econometrics models, some recommendations
are suggested for future research, policy implications and development intervention activities to
promote participation of small-scale irrigation to improve household’s livelihood. Based on the
findings of this study the following recommendations are forwarded:
Cost of land was found to influence negatively affect the participation of household’s on low
cost housing development. Land and housing markets should have protective but flexible
regulations as regulations in the country often lack flexibility and adaptability to the local urban
development circumstances bearing a significant relevance to land and housing markets.
Loan access was found to affect the participation positively, and will bring household’s to have
their house. National government and local governments should have to work collaborate for
having well financial service to give inclusive loan service for the low income group that has to
be enabling for accessing house.
Awareness for inspiring and motivating societies with incentives to have good culture of saving
practice should be undertaking by the local scholars for the residents, since as we have seen that
saving practice has found to be significant and positively affect the participation on housing
development.
77
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82
APPENDIX
Appendix I. Model specification error tests
A. Variance inflation factor for continues variable

. vif
Variable VIF 1/VIF
HSIZE 1.00 1.000000
Mean VIF 1.00
B. Contingency Coefficient (CC) for discrete variables

e(V) GEN AGE EDU_LEV M_ST EMP_SEC INCOME LOANAC~S LANDCO~N AVIALL~D COSLAND INFRST~T BULDGM~L
GEN 1.0000
AGE 0.0091 1.0000
EDU_LEV 0.0655 -0.0400 1.0000
M_ST -0.0728 -0.0143 0.0917 1.0000
EMP_SEC 0.1861 -0.0254 -0.0475 0.0524 1.0000
INCOME -0.0554 0.0344 -0.0125 0.0394 0.0133 1.0000
LOANACESS -0.0716 0.0004 -0.0603 -0.0852 -0.0577 -0.0817 1.0000
LANDCONDIN -0.0062 0.0284 0.0014 0.0717 -0.0343 -0.0578 0.0136 1.0000
AVIALLAND 0.0116 0.0928 0.0391 -0.0003 -0.0411 0.0921 -0.0055 -0.1501 1.0000
COSLAND -0.0238 -0.0583 -0.0109 0.1605 -0.0817 0.0511 0.1026 0.2135 0.0287 1.0000
INFRSTDEVT -0.1787 -0.0807 -0.0955 -0.0888 0.1934 0.1093 0.0114 0.0218 -0.0631 0.1010 1.0000
BULDGMATERL 0.0004 0.0419 -0.0020 0.0581 0.0697 0.0331 0.0518 -0.2772 0.0443 -0.0786 0.0138 1.0000
SAVING -0.0409 0.0279 0.0175 -0.1551 0.1963 -0.0141 0.0306 -0.1232 0.0524 -0.1024 -0.1440 0.1158
_cons -0.1059 -0.2594 -0.2499 -0.5515 -0.2831 -0.4508 -0.1007 -0.1845 -0.2479 -0.4569 -0.1440 -0.2159
C. Heteroscedasticity test
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance
Variables: fitted values of PARTONHODEVT
chi2(1) = 17.92
Prob > chi2 = 0.0000
D. Model Specification test
83
Logistic model for PARTONHODEVT, goodness-of-fit test
number of observations = 240

number of covariate patterns = 240
Pearson chi2(225) = 202.63
Prob > chi2 = 0.8555
Appendix II Logit model estimation result
A. Logistic regression with coefficient

Iteration 0: log pseudolikelihood = -152.06086
Logistic regression Number of obs = 240

Wald chi2(14) = 77.39
Prob > chi2 = 0.0000
Log pseudolikelihood = -100.20348 Pseudo R2 = 0.3410
Robust
PARTONHODEVT Coef. Std. Err. z P>|z| [95% Conf. Interval]
GEN 1.836418 .3892588 4.72 0.000 1.073485 2.599352

AGE -.0863172 .1930934 -0.45 0.655 -.4647733 .2921389
EDU_LEV .0701179 .0992534 0.71 0.480 -.1244153 .2646511
M_ST -.1745619 .4313762 -0.40 0.686 -1.020044 .6709199
HSIZE .0380181 .1882858 0.20 0.840 -.3310152 .4070514
EMP_SEC -.2952092 .1523188 -1.94 0.053 -.5937485 .0033301
INCOME .4369359 .1914661 2.28 0.022 .0616692 .8122026
LOANACESS .755012 .3733635 2.02 0.043 .0232329 1.486791
LANDCONDIN .9455772 .4257426 2.22 0.026 .111137 1.780017
AVIALLAND -.1457133 .1365966 -1.07 0.286 -.4134376 .1220111
COSLAND -.9096013 .3809608 -2.39 0.017 -1.656271 -.1629319
INFRSTDEVT 1.140778 .3936933 2.90 0.004 .3691534 1.912403
BULDGMATERL -.2224826 .1371712 -1.62 0.105 -.4913333 .046368
SAVING 1.007689 .3782176 2.66 0.008 .266396 1.748982
_cons -1.017094 1.701871 -0.60 0.550 -4.3527 2.318512
B. Logistic regression with odds ratio
84
Wald chi2(14) = 77.39
Prob > chi2 = 0.0000
Log pseudolikelihood = -100.20348 Pseudo R2 = 0.3410
Robust
PARTONHODEVT Odds Ratio Std. Err. z P>|z| [95% Conf. Interval]
GEN 6.274026 2.44222 4.72 0.000 2.925557 13.45501

AGE .9173033 .1771252 -0.45 0.655 .6282775 1.339289
EDU_LEV 1.072635 .1064627 0.71 0.480 .883013 1.302976
M_ST .8398248 .3622805 -0.40 0.686 .3605792 1.956036
HSIZE 1.03875 .1955818 0.20 0.840 .7181942 1.502381
EMP_SEC .7443758 .1133824 -1.94 0.053 .5522533 1.003336
INCOME 1.547957 .2963813 2.28 0.022 1.06361 2.252865
LOANACESS 2.127637 .7943821 2.02 0.043 1.023505 4.42288
LANDCONDIN 2.574299 1.095989 2.22 0.026 1.117548 5.92996
AVIALLAND .8644055 .1180748 -1.07 0.286 .6613728 1.129767
COSLAND .4026848 .1534071 -2.39 0.017 .1908494 .849649
INFRSTDEVT 3.129202 1.231946 2.90 0.004 1.44651 6.769334
BULDGMATERL .8005289 .1098095 -1.62 0.105 .6118101 1.04746
SAVING 2.739263 1.036037 2.66 0.008 1.305252 5.748746
_cons .3616444 .6154721 -0.60 0.550 .012872 10.16055
Appendix III Logit estimation for pscore
85
****************************************************
Algorithm to estimate the propensity score
****************************************************
The treatment is PARTONHODEVT
Partcipation on
low cost
housing
development Freq. Percent Cum.
None partcipant 79 32.92 32.92

Partcipant 161 67.08 100.00
Total 240 100.00
Estimation of the propensity score
Iteration 0: log likelihood = -152.06086


LR chi2(14) = 103.71
Prob > chi2 = 0.0000
Log likelihood = -100.20348 Pseudo R2 = 0.3410
PARTONHODEVT Coef. Std. Err. z P>|z| [95% Conf. Interval]
GEN 1.836418 .3748674 4.90 0.000 1.101692 2.571145

AGE -.0863172 .1786065 -0.48 0.629 -.4363796 .2637452
EDU_LEV .0701179 .0962159 0.73 0.466 -.1184619 .2586976
M_ST -.1745619 .4192615 -0.42 0.677 -.9962993 .6471755
HSIZE .0380181 .1807437 0.21 0.833 -.316233 .3922692
EMP_SEC -.2952092 .1444753 -2.04 0.041 -.5783755 -.0120429
INCOME .4369359 .1921265 2.27 0.023 .0603749 .8134969
LOANACESS .755012 .3771727 2.00 0.045 .0157671 1.494257
LANDCONDIN .9455772 .4361071 2.17 0.030 .0908229 1.800331
AVIALLAND -.1457133 .1335795 -1.09 0.275 -.4075242 .1160976
COSLAND -.9096013 .3848603 -2.36 0.018 -1.663914 -.155289
INFRSTDEVT 1.140778 .3769852 3.03 0.002 .4019007 1.879655
BULDGMATERL -.2224826 .1469875 -1.51 0.130 -.5105728 .0656075
SAVING 1.007689 .3846074 2.62 0.009 .2538723 1.761505
_cons -1.017094 1.71619 -0.59 0.553 -4.380764 2.346576
Note: the common support option has been selected

The region of common support is [.10658823, .99410713]
Description of the estimated propensity score

in region of common support
Estimated propensity score
Percentiles Smallest
1% .1180985 .1065882
5% .1888226 .1102467
10% .2706218 .1180985 Obs 228
25% .4896245 .1245469 Sum of Wgt. 228
50% .8170393 Mean .7028585

Largest Std. Dev. .2667355
75% .933518 .9889625
90% .9752066 .9909839 Variance .0711478
95% .9830154 .9915046 Skewness -.7098189
99% .9909839 .9941071 Kurtosis 2.16681
86
******************************************************
Step 1: Identification of the optimal number of blocks
Use option detail if you want more detailed output
******************************************************
The final number of blocks is 5
This number of blocks ensures that the mean propensity score

is not different for treated and controls in each block
**********************************************************
Step 2: Test of balancing property of the propensity score
Use option detail if you want more detailed output
**********************************************************
The balancing property is satisfied
This table shows the inferior bound, the number of treated

and the number of controls for each block
Partcipation on low
Inferior cost housing
of block development
of pscore None part Partcipan Total
.1065882 10 5 15
.2 20 5 25
.4 13 25 38
.6 18 16 34
.8 6 110 116
Total 67 161 228
*******************************************
End of the algorithm to estimate the pscore
*******************************************
87
Appendix IV Average Treatment effect on the Treated (ATT) estimation for poverty status
A. Kernel matching Method
******************************************************
Estimation of the ATT with the kernel matching method
*****************************************************
The outcome is povrtystatus
Variable | Obs Mean Std. Dev. Min Max
-------------+---------------------------------------------------------
povrtystatus | 228 .6447368 .479646 0 1
Partcipation on |
low cost |
housing |
development | Freq. Percent Cum.
----------------+-----------------------------------
None partcipant | 67 29.39 29.39
Partcipant | 161 70.61 100.00
----------------+-----------------------------------
Total | 228 100.00
Mean povrtystatus of matched treated = .81987578
Mean povrtystatus of matched controls = .20264521
88
Effect of treatment = .61723056
ATT estimation with the Kernel Matching method
---------------------------------------------------------
n. treat. n. contr. ATT Std. Err. t
---------------------------------------------------------
161 67 0.617 . .
---------------------------------------------------------
Note: Analytical standard errors cannot be computed. Use
the bootstrap option to get bootstrapped standard errors.
Bootstrapping of standard errors
command: attk povrtystatus PARTONHODEVT GEN AGE EDU_LEV M_ST HSIZE EMP_SEC INCOME
LOANACESS LANDCONDIN AVIALLAND COSLAND INFRSTDEVT BULD
> GMATERL SAVING , pscore(pscore) logit comsup bwidth(.1)
statistic: attk = r(attk)
note: label truncated to 80 characters
Bootstrap statistics Number of obs = 240
Replications = 50
------------------------------------------------------------------------------
Variable | Reps Observed Bias Std. Err. [95% Conf. Interval]
89
-------------+----------------------------------------------------------------
attk | 50 .6172305 .0210223 .1015515 .4131551 .821306 (N)
| .47288 .7890199 (P)
| .1971005 .7820981 (BC)
------------------------------------------------------------------------------
Note: N = normal
P = percentile
BC = bias-corrected
ATT estimation with the Kernel Matching method
Bootstrapped standard errors
---------------------------------------------------------
---------------------------------------------------------
161 67 0.617 0.102 6.078
---------------------------------------------------------
Saving results in r()
******************************************************
End of the estimation with the kernel matching method
******************************************************
90
B. Radius caliper matching method
*****************************************************
Estimation of the ATT with the radius matching method
*****************************************************
-------------+---------------------------------------------------------
povrtystatus | 228 .6447368 .479646 0 1
Average outcome of the matched treated
-------------+---------------------------------------------------------
povrtystatus | 161 .8198758 .3854899 0 1
Average outcome of the matched controls
Variable | Obs Weight Mean Std. Dev. Min Max
-------------+-----------------------------------------------------------------
povrtystatus | 67 160.999999 .2291221 .4234398 0 1
91
ATT estimation with the Radius Matching method
Analytical standard errors
---------------------------------------------------------
---------------------------------------------------------
161 67 0.591 0.083 7.160
---------------------------------------------------------
Note: the numbers of treated and controls refer to actual
matches within radius
*****************************************************
End of the estimation with the radius matching method
*****************************************************
C .Nearest Neighbor Matching method
****************************************************************
Estimation of the ATT with the nearest neighbor matching method
Random draw version
****************************************************************
-------------+---------------------------------------------------------
povrtystatus | 228 .6447368 .479646 0 1
92
Partcipation on |
low cost |
housing |
development | Freq. Percent Cum.
----------------+-----------------------------------
None partcipant | 67 29.39 29.39
Partcipant | 161 70.61 100.00
----------------+-----------------------------------
Total | 228 100.00
Average absolute pscore difference between treated and controls
-------------+---------------------------------------------------------
PSDIF | 161 .0156648 .0152967 .0000336 .0580885
Average outcome of the matched treated
-------------+---------------------------------------------------------
povrtystatus | 161 .8198758 .3854899 0 1
Average outcome of the matched controls
Variable | Obs Weight Mean Std. Dev. Min Max
-------------+-----------------------------------------------------------------
povrtystatus | 33 161 .2236025 .4231188 0 1
ATT estimation with Nearest Neighbor Matching method
(random draw version)
93
---------------------------------------------------------
---------------------------------------------------------
161 33 0.596 0.180 3.308
---------------------------------------------------------
nearest neighbour matches
*****************************************************************************
End of the estimation with the nearest neighbor matching (random draw) method
*****************************************************************************
94
Appendix V. Psmatch2 for poverty status
. psmatch2 PARTONHODEVT GEN AGE EDU_LEV M_ST HSIZE EMP_SEC INCOME LOANACESS
LANDCONDIN AVIALLAND COSLAND INFRSTDEVT BULDGMATERL SAVING,outc
> om( povrtystatus ) pscore() logit quietly ate radius caliper(0.25) common
--------------------------------------------------------------------------------------
--
Variable Sample | Treated Controls Difference S.E. T-

stat
----------------------------
+-----------------------------------------------------------
povrtystatus Unmatched | .819875776 .215189873 .604685903 .054248025

11.15
ATT | .79245283 .214281744 .578171086 .076342103

7.57
ATU | .223880597 .739319911 .515439314 .

.
ATE | .553876123 .
.
----------------------------
+-----------------------------------------------------------
Note: S.E. does not take into account that the propensity score is estimated.
psmatch2: | psmatch2: Common
Treatment | support
assignment | Off suppo On suppor | Total
-----------+----------------------+----------
Untreated | 12 67 | 79
Treated | 55 106 | 161
-----------+----------------------+----------
Total | 67 173 | 240
95
Appendix. VI pstest result
. pstest GEN AGE EDU_LEV M_ST HSIZE EMP_SEC INCOME LOANACESS LANDCONDIN AVIALLAND
COSLAND INFRSTDEVT BULDGMATERL SAVING,both
--------------------------------------------------------------------------------------
--
Unmatched | Mean %reduct | t-test | V(T)/
Variable Matched | Treated Control %bias |bias| | t p>|t| | V(C)
--------------------------+----------------------------------+---------------
+----------
GEN U | .76398 .31646 100.0 | 7.40 0.000 | .
M | .66981 .52617 32.1 67.9 | 2.15 0.033 | .
| | |
AGE U | 2.236 2.3038 -6.7 | -0.49 0.622 | 0.85
M | 2.2547 2.3067 -5.1 23.2 | -0.37 0.714 | 0.90
| | |
EDU_LEV U | 3.9006 3.8608 2.1 | 0.15 0.878 | 0.99
M | 3.9057 3.7397 8.8 -316.4 | 0.64 0.524 | 0.98
| | |
M_ST U | 1.7826 1.6456 30.5 | 2.28 0.023 | 0.74
M | 1.7547 1.7279 6.0 80.5 | 0.44 0.658 | 0.93
| | |
HSIZE U | 4.2484 4.1392 10.4 | 0.75 0.452 | 1.10
M | 4.1792 4.1361 4.1 60.4 | 0.28 0.777 | 0.77
| | |
EMP_SEC U | 2.0124 2.8481 -68.2 | -4.92 0.000 | 1.12
M | 2.3396 2.7242 -31.4 54.0 | -2.25 0.026 | 1.51*
| | |
INCOME U | 3.4037 3.0759 33.0 | 2.48 0.014 | 0.69*
M | 3.3396 3.4079 -6.9 79.2 | -0.55 0.580 | 0.89
| | |
LOANACESS U | .70186 .5443 32.8 | 2.42 0.016 | .
96
M | .64151 .65606 -3.0 90.8 | -0.22 0.825 | .
| | |
LANDCONDIN U | .75776 .60759 32.5 | 2.42 0.016 | .
M | .72642 .78908 -13.6 58.3 | -1.06 0.289 | .
| | |
AVIALLAND U | 2.2671 2.3797 -8.2 | -0.60 0.548 | 0.96
M | 2.3679 2.3706 -0.2 97.6 | -0.01 0.989 | 0.80
| | |
COSLAND U | 1.3168 1.557 -49.7 | -3.66 0.000 | 0.87
M | 1.4057 1.3919 2.8 94.3 | 0.20 0.839 | 1.01
| | |
INFRSTDEVT U | .72671 .37975 74.1 | 5.48 0.000 | .
M | .60377 .54726 12.1 83.7 | 0.83 0.408 | .
| | |
BULDGMATERL U | 2.0248 2.2532 -17.8 | -1.27 0.204 | 1.26
M | 2.1887 2.1398 3.8 78.6 | 0.28 0.780 | 1.58*
| | |
SAVING U | .61491 .32911 59.5 | 4.31 0.000 | .
M | .45283 .38715 13.7 77.0 | 0.97 0.335 | .
| | |
--------------------------------------------------------------------------------------
* if variance ratio outside [0.73; 1.36] for U and [0.68; 1.47] for M
-----------------------------------------------------------------------------------
Sample | Ps R2 LR chi2 p>chi2 MeanBias MedBias B R %Var
-----------+-----------------------------------------------------------------------
Unmatched | 0.346 105.15 0.000 37.5 32.7 163.2* 1.09 11
Matched | 0.043 12.64 0.555 10.3 6.4 49.6* 2.46* 22
-----------------------------------------------------------------------------------
* if B>25%, R outside [0.5; 2]
97
Appendix VII. Base line ATT and Simulated ATT Analysis for poverty status Using Radius
Caliper
. sensatt povrtystatus PARTONHODEVT GEN AGE EDU_LEV M_ST HSIZE EMP_SEC INCOME
LOANACESS LANDCONDIN AVIALLAND COSLAND INFRSTDEVT BULDGMATERL
> SAVING,p11(0.86) p10(0.77) p01( 0.83) p00(0.8) alg(attr)se(bse)r(100) ycent(25)

comsup logit
*** THIS IS THE BASELINE ATT ESTIMATION (WITH NO SIMULATED CONFOUNDER).
The program is searching for matches of treated units within radius.
This operation may take a while.
ATT estimation with the Radius Matching method
---------------------------------------------------------
---------------------------------------------------------
161 67 0.591 0.083 7.160
---------------------------------------------------------
matches within radius
*** THIS IS THE SIMULATED ATT ESTIMATION (WITH THE CONFOUNDER U).
The probability of having U=1 if T=1 and Y=1 (p11) is equal to: 0.86
98
The probability of having U=1 if T=1 (p1.) is equal to: 0.84
The probability of having U=1 if T=0 (p0.) is equal to: 0.81
The program is iterating the ATT estimation with simulated confounder.
You have chosen to perform 100 iterations. This step may take a while.
ATT estimation with simulated confounder
Between-imputation standard errors
-----------------------------------------------
ATT Std. Err. Out. Eff. Sel. Eff.
-----------------------------------------------
0.594 0.012 2.409 1.508
-----------------------------------------------
Note: Both the outcome and the selection effect
are odds ratios from logit estimations.
99
Wollo University
College of Business and Economics
The Structured Questionnaire of the study participant
Introduction to the respondent:
This questionnaire is design by a postgraduate student in the Department of Economics, wello

University to collect require primary data so as to undertake a study entitled as ‘The impact of
low cost housing development program on urban household poverty status: evidence from
Dessie city, south wollo zone, Amhara regional state’ in 2020. Your responses will be kept
confidential and have a great deal of importance increasing the accuracy and reliability of the
study so as to draw policy recommendations.
ALELIGN ASICHALEW
Thanks a lot!
NB. Circle the relevant option and fill the specific information
Section I: Background Information
1. Age 1= 18-30year 2= 31-40 year 3 = 41- 50 year 4 = > 51 year
2. Sex 0 = female 1= male
3. Marital status 0 = single 1 = married
4. Educational level? 0 = Illiterate
1 = primary education
2 = secondary education
100
3 = diploma
4= degree and above
5. Household size 1 = Number of children…………..
2 = Others……………
Section II: Socio-economic characteristics
1. Condition of activity?
1= Employed 2= Unemployed
2. What is your employment sector?
1 = own business employed 2 = Government employed 3 = privately employed
4 = NGO employed 5 = unemployed
3. What category best describes your total family monthly income (In Birr)?
1 = ≤1590 2 = 1600-3500 3 = 3501-5000
4 = 5001-7500 5 = 7501-9000 6 = >9501
4. What is family source of income? (More than one answer is possible).
1=Salary 2= Rent 3= from relatives 4= other
Section III: Housing situation
1. How much do you pay, monthly, for the house (In Birr)?
1= ≤1000 2 = 1001-2000 3 = 2001-3000 4= >3001
2. How much money do you spend a month for food (In Birr)?
101
1= ≤200 2= 201 – 500 3= 501 – 1000
4= 1001 – 1500 5= 1501 – 2000 6= ≥ 2001
3. Non-food monthly expenditure
1= For cloths…………….. 3= For holiday/celebrations…………
2= For recreations…………….. 4= Payment for maid, guards……………..
4. How much money do you spend a month for education (In Birr)?
1 ≤200 2=201 – 500 3=501 – 1000
4=1001 – 1500 5=1501 – 2000 6 = ≥ 2001
5. Was there any sick family member in your household in the last 12 months?
1= Yes 0 = No
If your response is yes how many? .............. How many times? ..................
6. How much spend for health treatment in the last 12 months (In Birr)?
1= ≤1000 1= 1001-2000 3 = 2001-3000 4= >3001
7. Do you have saving practice from your monthly income?
1=Yes 0= No
8. If your response is yes how much do you save (on average)?
1= ≤200 1= 201-500 3 = 501-1000 4 = 1001-2000 5= >2001
9. How long do you stay in this house/village?
1= less than1year 2= 1-4years 3 = 4- 6 years 4= >7 years
10. How many rooms do you have in your house?
102
1=1 2=2 3=>3
11. Do you have access to credit?
1=Yes 0= No
12. Do you have own land?
1= Yes 0= No
Availability of land
13 To what extent is availability of land affecting development of low cost housing in
Dessie city?
1. Very great Extent []
2. Great Extent []
3. Moderately Extent []
4. Less Extent []
5. No Extent []
Cost of land
14 How do you rate the current land prices in Dessie city?
1. Reasonably priced []
2. Expensive []
3. Very expensive []
15 Has pricing of land affects development of low cost housing?

1 Yes []
2 No []
Infrastructure and housing

16 Do you think that infrastructure has impacts on low cost housing development
1 Yes []
2 No []
Building materials
17 To what extent does availability of building materials influence provision of low cost houses
in your company?
103
1. Very great Extent []
2. Great Extent []
3. Moderately Extent []
4. Less Extent []
5. No Extent []
18. Asset
accumulation………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………….
Section IV: Focused Group Discussion Guide
1. How to solve the problem of housing?
Thank you!!!
104

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College of Business and Economics

THE IMPACT OF LOW-COST HOUSING DEVELOPMENT

A Thesis Submitted to department of Economics In Partial Fulfillment

A Thesis Submitted to department of Economics In Partial Fulfillment

Amare Mitiku (PhD)

Chairperson signature date

Internal examiner signature date

External examiner signature date

Name: Alelign Asichalew Signature:

Date of submission: September, 2020

Place: Wollo University, Dessie

Table 1: Proportional sample allocation method...........................................................................27

Appendix I. Model specification error tests…………………………………83

Appendix II Logit model estimation result…………………………………..84

Appendix III Logit estimation for pscore…………………………………….85

Appendix VI pstest result…………………………………………………….95

ATT Average treated effect on treated

Housing is the leading component of urbanization, it is more numerous, more extensive,

1.2. Statement of the Problem

1.3. Research questions

This research, therefore, tries to answer the following main questions:

1.4. Objectives of the study

The specific objectives include:

1.5. Research hypothesis

1.6. Significance of the research

Therefore, the study is providing evidence to policy-makers so that appropriate

1.7. Delimitation/ Scope of the study

1.8. Limitation of the study

The major constraints include unavailability of adequate and up to date quantitative as

1.9. Meaning and Definitions of terms

Household: Constitutes of a person or group of persons, irrespective of weather- related

Member of household: According to CSA, 2012 person constituting a household is

Household size: Is the total number of members of a household.

House: A building that functions as a home (See https://en.wikipedia.org).

1.10. Organization of the study

2.1.1. Poverty and its measurement

The first step in measuring poverty is defining an indicator such as income or

2.1.2. The effect of urbanization on housing

2.1.3. Poverty In Urban

The multidimensional character of poverty in Ethiopia is reflected in many respects such

2.1.4. Housing as a means for out of poverty

2.1.5. Housing Co-operative led housing development

2.1.8. An overview of housing conditions in Ethiopia

2.2. Empirical studies

2.2.1 The links between housing and poverty

2.2.2 Factors Influencing On Low Cost Housing Development

Availability of Land and Low-Cost Housing

Cost of Land and Low-Cost Housing

The absence of robust credit markets in developing countries is a significant impediment

Infrastructure Development and Low-Cost Housing

Location of land, and land

Infrastructure and housing Code of building

Waste management, Utilization of local resources

Source own manipulation, 2020

3.1. Description of the study area

3.2. Research Design

3.3. Source of data and types

3.4. Target population

3.5. Sampling technique, Sampling frame and Sample size determination

i. For rented households

ii. For low cost house owner households

Strata Number of Households Sample Size

3.6. Method of data collection