IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

The Nature of Unemployment in Urban Ethiopia

  • Pieter Serneels

    (Centre for the Study of African Economies)

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://econwpa.repec.org/eps/dev/papers/0409/0409042.pdf
Download Restriction: no

Paper provided by EconWPA in its series Development and Comp Systems with number 0409042.

as
in new window

Length: 48 pages
Date of creation: 28 Sep 2004
Handle: RePEc:wpa:wuwpdc:0409042
Note: Type of Document - pdf; pages: 48
Contact details of provider: Web page: http://econwpa.repec.org

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. David G. Blanchflower & Richard B. Freeman, 2000. "Youth Employment and Joblessness in Advanced Countries," NBER Books, National Bureau of Economic Research, Inc, number blan00-1, 08.
  2. Narendranathan, Wiji & Elias, Peter, 1993. "Influences of Past History on the Incidence of Youth Unemployment: Empirical Findings for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 161-85, May.
  3. Korpi, Tomas, 1995. "Effects of Manpower Policies on Duration Dependence in Re-employment Rates: The Example of Sweden," Economica, London School of Economics and Political Science, vol. 62(247), pages 353-71, August.
  4. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
  5. Geeta G. Kingdon & John B. Knight, 2001. "Unemployment in South Africa: The nature of the beast," CSAE Working Paper Series 2001-15, Centre for the Study of African Economies, University of Oxford.
  6. Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S29-59, Supplemen.
  7. Jackman, Richard & Layard, Richard, 1991. "Does Long-term Unemployment Reduce a Person's Chance of a Job? A Time-Series Test," Economica, London School of Economics and Political Science, vol. 58(229), pages 93-106, February.
  8. Rama, Martin, 1999. "The Sri Lankan unemployment problem revisited," Policy Research Working Paper Series 2227, The World Bank.
  9. William T. Dickens & Kevin Lang, 1991. "An Analysis of the Nature of Unemployment in Sri Lanka," NBER Working Papers 3777, National Bureau of Economic Research, Inc.
  10. Mengistae, Taye, 1999. "Wage rates and job queues - does the public sector overpay in Ethiopia?," Policy Research Working Paper Series 2105, The World Bank.
  11. Tunali, Insan & Assaad, Ragui, 1992. "Market Structure and Spells of Employment and Unemployment: Evidence from the Construction Sector in Egypt," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(4), pages 339-367, Oct.-Dec..
  12. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, December.
  13. Olivier Jean Blanchard & Peter Diamond, 1990. "Ranking, Unemployment Duration, and Wages," NBER Working Papers 3387, National Bureau of Economic Research, Inc.
  14. Ted O'Donoghue and Matthew Rabin., 2000. "Risky Behavior Among Youths: Some Issues from Behavioral Economics," Economics Working Papers E00-285, University of California at Berkeley.
  15. David Blanchflower, 1996. "Youth Labour Markets in 23 Countries: A Comparison Using Micro Data," CEP Discussion Papers dp0284, Centre for Economic Performance, LSE.
  16. Lynch, Lisa M., 1985. "State dependency in youth unemployment : A lost generation?," Journal of Econometrics, Elsevier, vol. 28(1), pages 71-84, April.
  17. Taye Mengistae, 1998. "Skill formation and job matching effects in wage growth: the case of manufacturing workers in Ethiopia," CSAE Working Paper Series 1998-19, Centre for the Study of African Economies, University of Oxford.
  18. Pramila Krishnan & Tesfaye Gebre Selassie & Stefan Dercon, 1998. "The urban labour market during structural adjustment: Ethiopia 1990-1997," CSAE Working Paper Series 1998-09, Centre for the Study of African Economies, University of Oxford.
  19. Klasen, Stephan & Woolard, Ingrid, 2000. "Surviving Unemployment without State Support: Unemployment and Household Formation in South Africa," IZA Discussion Papers 237, Institute for the Study of Labor (IZA).
  20. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  21. Gerard J. van den Berg & Bas van der Klaauw, 1998. "Combining Micro and Macro Unemployment Duration Data," Tinbergen Institute Discussion Papers 98-098/3, Tinbergen Institute.
  22. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September.
  23. Krishnan, Pramila, 1996. "Family Background, Education and Employment in Urban Ethiopia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 167-83, February.
  24. Appleton, Simon & Knight, John & Song, Lina & Xia, Qingjie, 2002. "Labor retrenchment in China: Determinants and consequences," China Economic Review, Elsevier, vol. 13(2-3), pages 252-275.
  25. George Akerlof, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 599-617.
  26. Pieter Serneels, 2004. "The Added Worker Effect and Intrahousehold Aspects of Unemployment," Development and Comp Systems 0409014, EconWPA.
  27. Pieter Serneels, 2004. "Explaining Non-Negative Duration Dependence Among the Unemployed," Development and Comp Systems 0409013, EconWPA.
  28. Holzer, Harry J, 1988. "Search Method Use by Unemployed Youth," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 1-20, January.
  29. Bergstrom, R & Edin, P-A, 1992. "Time Aggregation and the Distributional Shape of Unemployment Duration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(1), pages 5-30, Jan.-Marc.
  30. Jonathan Gruber, 2001. "Risky Behavior among Youths: An Economic Analysis," NBER Books, National Bureau of Economic Research, Inc, number grub01-1, 08.
  31. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  32. Assaad, Ragui, 1997. "The Effects of Public Sector Hiring and Compensation Policies on the Egyptian Labor Market," World Bank Economic Review, World Bank Group, vol. 11(1), pages 85-118, January.
  33. Arulampalam, Wiji & Stewart, Mark B, 1995. "The Determinants of Individual Unemployment Durations in an Era of High Unemployment," Economic Journal, Royal Economic Society, vol. 105(429), pages 321-32, March.
  34. T. Paul Schultz, 2002. "Wage Gains Associated with Height as a Form of Health Human Capital," American Economic Review, American Economic Association, vol. 92(2), pages 349-353, May.
  35. Chris Elbers & Geert Ridder, 1982. "True and Spurious Duration Dependence: The Identifiability of the Proportional Hazard Model," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 403-409.
  36. Trivedi, P K & Hui, W T, 1987. "An Empirical Study of Long-term Unemployment in Australia," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 20-42, January.
  37. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
  38. Geeta G. Kingdon & John B. Knight, 2000. "Are searching and non-searching unemployment distinct states when unemployment is high? The case of South Africa," CSAE Working Paper Series 2000-02, Centre for the Study of African Economies, University of Oxford.
  39. Lubyova, M. & van Ours, J.C., 1998. "Unemployment Durations of Job Losers in a Labor Market in Transition," Discussion Paper 1998-39, Tilburg University, Center for Economic Research.
  40. McKensie, C.R. & McAleer, M., 1990. "On Efficient Estimation and Correct Inference in Models with Generated Regressions: A General Approach," Papers 211, Australian National University - Department of Economics.
  41. Groot, Wim, 1990. "Heterogeneous Jobs and Re-employment Probabilities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(3), pages 253-67, August.
  42. Mark C. Foley, 1997. "Determinants of Unemployment Duration in Russia," William Davidson Institute Working Papers Series 81, William Davidson Institute at the University of Michigan.
  43. repec:fth:oxesaf:98-19 is not listed on IDEAS
  44. Udall, Alan T. & Sinclair, Stuart, 1982. "The `luxury unemployment' hypothesis: A review of recent evidence," World Development, Elsevier, vol. 10(1), pages 49-62, January.
  45. Berry, A. & Sabot, R. H., 1978. "Labour market performance in developing countries: A survey," World Development, Elsevier, vol. 6(11-12), pages 1199-1242.
  46. Jean-Yves Bienvenue & Lucette Carter & Olivier Favereau & Jacques Zighera, 1997. "Differential Analysis of Unemployment Duration with Emphasis on Long-Term Unemployment," LABOUR, CEIS, vol. 11(1), pages 53-82, 04.
  47. Thomas, Duncan & Strauss, John, 1997. "Health and wages: Evidence on men and women in urban Brazil," Journal of Econometrics, Elsevier, vol. 77(1), pages 159-185, March.
  48. Pramila Krishnan, 2000. "Public sector pay and private sector wage premiums: testing alternative models of wage determination," CSAE Working Paper Series 2000-07, Centre for the Study of African Economies, University of Oxford.
  49. Foley, M.C., 1997. "Determinants of Unemployment Duration in Russia," Papers 779, Yale - Economic Growth Center.
  50. Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 439-479.
  51. Rama, Martin, 1998. "How Bad Is Unemployment in Tunisia? Assessing Labor Market Efficiency in a Developing Country," World Bank Research Observer, World Bank Group, vol. 13(1), pages 59-77, February.
  52. Hernaes, E. & Strom, S., 1995. "Heterogeneity and Unemployment Duration," Memorandum 28/1995, Oslo University, Department of Economics.
  53. Narendranathan, W & Stewart, Mark B, 1993. "How Does the Benefit Effect Vary as Unemployment Spells Lengthen?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 361-381, Oct.-Dec..
  54. Lynch, Lisa M, 1989. "The Youth Labor Market in the Eighties: Determinants of Re-employment Probabilities for Young Men and Women," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 37-45, February.
  55. Trivedi, P K & Alexander, J N, 1989. "Reemployment Probability and Multiple Unemployment Spells: A Partial-Likelihood Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(3), pages 395-401, July.
  56. Tenjo, Jaime, 1990. "Opportunities, Aspirations, and Urban Unemployment of Youth: The Case of Colombia," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 733-761, July.
  57. Basu, Kaushik & Genicot, Garance & Stiglitz, Joseph E., 1999. "Household labor supply, unemployment, and minimum wage legislation," Policy Research Working Paper Series 2049, The World Bank.
  58. Mark C. Foley, 1997. "Determinants of Unemployment Duration in Russia," Working Papers 779, Economic Growth Center, Yale University.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpdc:0409042. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.