Welfare Impact of the Condominium Housing Program in Mekelle

Abstract

Since 2005, Ethiopia has been implementing a large-scale housing program which aims to reduce the housing supply shortage and improve the living standard of the urban low and middle income households through the construction of high-rise condominium houses equipped with basic services. This paper evaluates the impact of the condominium housing program on the welfare of the beneficiary households using a cross-sectional data from a sample of 335 households who applied for the houses, in Mekelle city. To account for the selection bias due to differences in observable characteristics the PSM method is used. Moreover, to check the robustness of the impact estimates sensitivity analysis is applied. The result shows that the program has a positive significant impact on wealth of household, approximated by a wealth index including housing quality, use of consumer durables and access to services, and on annual total education expense of households per attending child. The wealth index and the annual total education expense per attending child of the beneficiary households have increased by 0.23 to 0.25 and by Birr 502 to Birr 641, respectively. However, there is no statistically significant evidence as whether the program affects the other welfare indicators (monthly per capita food expenditure, incidence of sickness and children’s educational attainment, as explained by highest level of children’s schooling and by the proportion of school age children attending school). The sensitivity analysis on the significant outcome indicators shows that the estimations are robust to deviations from the identifying CIA assumption.