Abstract
As urbanization has occurred without the attendant growth and development spillovers in underdeveloped nations including Ethiopia, the phenomenon brought undesirable social and economic consequences. This article investigates the relationship between urbanization and urban household income and housing problem. Structural equation modeling was used to run mediation analysis. Correlation and regression analyses were also carried out to measure the direction and magnitude of the effect of the independent variable on the dependent. Regression analysis results indicate the existence of a significant direct effect of urbanization on limitations in income generating capacity of citizens. This article recommends taking policy measures to include development agendas of small and medium towns into regional plans as they absorb the influx to large cities and can help migrants experience the challenging complex urban life step by step. In addition, a policy intervention in the area of land tenure system and real estate development is required before the housing problems gets worsened.
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