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The Nature of Unemployment in Urban Ethiopia

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  • Pieter Serneels

Abstract

With around 50% of the urban men between age 15 and 30 unemployed, Ethiopia has one of the highest unemployment rates worldwide. This paper describes the nature of unemployment among young men in urban Ethiopia. We analyse the determinants of incidence and duration and find that most variables have the same effect on both. Unemployment is concentrated among relatively well-educated first time job seekers who come from the middle classes. Mean duration of unemployment is close to four years and is higher for those aspiring to a public sector job. The unemployed have realistic reservation wages. Those living in Addis are less likely to become unemployed, and ethnicity has no effect. We find that both the incidence and duration of unemployment are negatively related to household welfare. Since we cannot reject that the latter is endogenous, this suggests that households use their savings and cut back consumption to cope with unemployment. Those with a father working as a civil servant have shorter durations, suggesting that this provides an information advantage. The medium of job search also has a strong effect indicating that information is costly. Social networks only help after one has become unemployed. Our results are robust to changes in the macro environment. We explain why people do not take up a job while waiting in unemployment.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2004-01.

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Date of creation: 01 Jan 2004
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Handle: RePEc:oxf:wpaper:wps/2004-01

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Keywords: unemployment; youth; duration; urban labour market; Ethiopia;

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Cited by:
  1. World Bank, 2008. "World Development Report 2007 Development and the Next Generation," Working Papers id:1755, eSocialSciences.
  2. Dimova, Ralitza & Nordman, Christophe Jalil & Roubaud, François, 2008. "Allocation of Labour in Urban West Africa: Implication for Development Policies," IZA Discussion Papers 3558, Institute for the Study of Labor (IZA).
  3. Geeta Kingdon & Justin Sandefur & Francis Teal, 2006. "Labour Market Flexibility, Wages and Incomes in Sub‐Saharan Africa in the 1990s," African Development Review, African Development Bank, vol. 18(3), pages 392-427.
  4. Francis Teal & Rosemary Atieno, 2006. "Gender, Education and Occupational Outcomes: Kenya`s Informal Sector in the 1990s," Economics Series Working Papers GPRG-WPS-050, University of Oxford, Department of Economics.
  5. Christophe Nordman & Laure Pasquier-Doumer, 2012. "Vocational Education, On-the-Job Training and Labour Market Integration of Young Workers in Urban West Africa," Working Papers DT/2012/13, DIAL (Développement, Institutions et Mondialisation).

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