DETERMINANTS OF URBAN HOUSEHOLD CONSUMPTION EXPENDITURE: THE CASE OF GULELLE SUBCITY OF ADDIS ABABA, ETHIOPIA

Abstract

The main objective of this study was to examine the determinants of urban household consumption expenditure in Gulelle Sub-City of Addis Ababa. A total of 100 respondents, were randomly selected to administer the questionnaire for data collection from two Woredas. Descriptive and explanatory research designs as well as qualitative and quantitative research approach were employed in conducting the study. The data were described using means and histograms .The multiple linear regression model was applied to identify determinants for consumption expenditure of a household. The descriptive result shows mean disposable monthly income, consumption expenditure, and saving amount of Male household heads are higher than that of Female household heads. Considering education level of the household heads, the consumption level is more or less the same. Regarding marital status, those who are married consume little more than those who are single. The econometric results of the study showed significant interrelationships between disposable income and consumption plus saving and consumption. The econometric model result pointed that household disposable income directly related to consumption; and saving amount is negatively related with consumption. Finally, Implications and recommendations were suggested in accordance with the major findings. The implications are concreted efforts should be geared towards improving the income base of households. This can be achieved, among other options, through encouraging small businesses and discouraging income generating impediments such as excessive taxation. Through this, more employment will be generated and more income will accrue to the households which will in turn promotes aggregate consumption.