A Thesis Submitted in Partial Fulfillment of the Master's Degree in Economics, Development Policy Analysis Specializations

Abstract

Urban poverty remains a significant challenge in Ethiopia, particularly in medium-sized towns like Kolla-Tembien Wereda, despite national economic progress. This study investigates the incidence, depth, determinants, and coping strategies of urban poverty in this context, where rising living costs, limited employment, and inadequate institutional support persist. The research aims to identify key poverty determinants and assess survival mechanisms of poor households. A cross-sectional survey was conducted with 300 randomly selected household heads across six kebeles in Kolla-Tembien Wereda, using a structured questionnaire to collect data on demographics, income, expenditure, education, employment, access to services, and coping strategies. Descriptive statistics revealed that 62% of households fell below the local poverty line, with an average household size of 5.3 persons and low educational attainment (primarily primary school). Most households relied on informal employment, such as daily labor and petty trade, while having limited access to stable jobs and basic services like water, electricity, and healthcare. A binary logit model identified education, family size, gender, access to credit, and non-farm activities as significant determinants of poverty. Higher education and access to credit reduced poverty likelihood, while larger families and female-headed households faced greater vulnerability due to higher dependency and unequal opportunities. Coping mechanisms included informal borrowing, reducing food consumption, renting dwellings, selling assets, and participating in group solidarity schemes like “Idir” and “Iqub.” Some households limited children’s schooling or delayed healthcare, often increasing long-term vulnerability. These findings highlight the multidimensional nature of urban poverty, driven by structural, demographic, and institutional factors. The study recommends strengthening local credit institutions, promoting skill development, and improving urban infrastructure to address poverty’s root causes. This research provides empirical evidence to inform municipal povertyreduction policies and livelihood programs in Ethiopia’s medium-sized towns.