Factors Affecting Consumption Expenditure and Regional Comparison in Ethiopia

Abstract

This study evaluated factors affecting households consumption expenditure in Ethiopia using cross-sectional survey data collected from 6770 households in Ethiopia by World Bank in 2018/19 fiscal year. By applying quantile regression model, the study found that household’s consumption expenditure was affected by different explanatory variables either positively or negatively at different significant level. Out of the dependent variables that were significantly affecting household consumption expenditure were place of residence, family size, region of the family residence and access to credit. This variables are affecting were affecting either positively or negatively households consumption expenditure at different significant level at different quantiles. Place of residence (urban or rural) in all quantiles affects consumption expenditure negatively. That means households live in urban areas have less consumption expenditure than rural areas. Family size also affects household consumption expenditure at all quantile level negatively. There is high consumption expenditure differences among regions. Especially Amhara region had a less consumption expenditure as compared to others regions. Access to credit had a positive effect on household consumption expenditure and it had a significant effect at 75 th quantile level. As per the research results the researcher recommended as more research may be required to be carried out to assess factors affecting households consumption expenditure in Ethiopia which is the major concern of policy makers in Ethiopia. Keywords: Consumption, Expenditure, quantile regression and Ethiopia DOI: 10.7176/RHSS/12-18-01 Publication date: September 30 th 2022