IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login 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
Date of revision:
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. Colin McKenzie & Michael McAleer, 1997. "On Efficient Estimation and Correct Inference in Models with Generated Regressors: a General Approach," The Japanese Economic Review, Japanese Economic Association, vol. 48(4), pages 368-389, December.
  2. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
  3. Abbring, Jaap H. & van den Berg, Gerard J. & van Ours, Jan C., 2002. "The anatomy of unemployment dynamics," European Economic Review, Elsevier, vol. 46(10), pages 1785-1824, December.
  4. van den Berg, Gerard J. & van der Klaauw, Bas, 2001. "Combining micro and macro unemployment duration data," Journal of Econometrics, Elsevier, vol. 102(2), pages 271-309, June.
  5. Groot, Wim, 1990. "The effects of benefits and duration dependence on re-employment probabilities," Economics Letters, Elsevier, vol. 32(4), pages 371-376, April.
  6. 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.
  7. MartÌn Rama, 2003. "The Sri Lankan Unemployment Problem Revisited," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 510-525, 08.
  8. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September.
  9. Mark C. Foley, 1997. "Determinants of Unemployment Duration in Russia," Working Papers 779, Economic Growth Center, Yale University.
  10. van den Berg, Gerard J & van Ours, Jan C, 1994. "Unemployment Dynamics and Duration Dependence in France, the Netherlands and the United Kingdom," Economic Journal, Royal Economic Society, vol. 104(423), pages 432-43, March.
  11. Edin, P.A. & Bergstrom, R., 1991. "Time aggregation and the Distributional Shape of Unemployment Duration," Papers 1991u, Uppsala - Working Paper Series.
  12. 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.
  13. 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.
  14. Pramila Krishnan & Tesfaye Gebre Selassie & Stefan Dercon, 1998. "The Urban Labour Market During Structural Adjustment: Ethiopia 1990-1997," Working Papers Department of Economics ces9817, KU Leuven, Faculty of Economics and Business, Department of Economics.
  15. Harry J. Holzer, 1986. "Search Method Use by Unemployed Youth," NBER Working Papers 1859, National Bureau of Economic Research, Inc.
  16. O'Donoghue, Ted & Rabin, Matthew, 2000. "Risky Behavior Among Youths: Some Issues from Behavioral Economics," Department of Economics, Working Paper Series qt5sf0z5rs, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  17. 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.
  18. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  19. 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.
  20. Hirschman, Charles, 1982. "Unemployment among Urban Youth in Peninsular Malaysia, 1970: A Multivariate Analysis of Individual and Structural Effects," Economic Development and Cultural Change, University of Chicago Press, vol. 30(2), pages 391-412, January.
  21. 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 361-81, Oct.-Dec..
  22. Martina Lubyova & Jan C. van Ours, 1999. "Unemployment durations of job losers in a labour market in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 665-686, November.
  23. Stephen Klasen & Ingrid Woolard, 2005. "Surviving unemployment without state support: Unemployment and household formation in South Africa," SALDRU/CSSR Working Papers 129, Southern Africa Labour and Development Research Unit, University of Cape Town.
  24. Pramila Krishnan, 2000. "Public sector pay and private sector wage premiums: testing alternative models of wage determination," Economics Series Working Papers WPS/2000-07, University of Oxford, Department of Economics.
  25. Pieter Serneels, 2004. "The Added Worker Effect and Intrahousehold Aspects of Unemployment," Development and Comp Systems 0409014, EconWPA.
  26. 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.
  27. Torelli, Nicola & Trivellato, Ugo, 1989. "Youth unemployment duration from the Italian labour force survey: Accuracy issues and modelling attempts," European Economic Review, Elsevier, vol. 33(2-3), pages 407-415, March.
  28. Olivier Jean Blanchard & Peter Diamond, 1990. "Ranking, Unemployment Duration, and Wages," NBER Working Papers 3387, National Bureau of Economic Research, Inc.
  29. Thomas, D. & Strauss, J., 1997. "Health and Wages: Evidence on Men and Women in Urban Brazil," Papers 97-05, RAND - Reprint Series.
  30. 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.
  31. van den Berg, G. & van Ours, J.C., 1996. "Unemployment dynamics and duration dependence," Other publications TiSEM 4374742f-8d86-458d-9ab3-6, Tilburg University, School of Economics and Management.
  32. 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.
  33. Berg, G.J. & Ours, J.C., 1993. "Unemployment dynamics and duration dependence in France, the Netherlands and the UK," Serie Research Memoranda 0038, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  34. Taye Mengistae, 1998. "Skill formation and job matching effects in wage growth: the case of manufacturing workers in Ethiopia," Economics Series Working Papers WPS/1998-19, University of Oxford, Department of Economics.
  35. Berry, A. & Sabot, R. H., 1978. "Labour market performance in developing countries: A survey," World Development, Elsevier, vol. 6(11-12), pages 1199-1242.
  36. 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 733-61, July.
  37. Pieter Serneels, 2002. "Explaining Non-Negative Duration Dependence Among the Unemployed," Economics Series Working Papers WPS/2002-13, University of Oxford, Department of Economics.
  38. Jonathan Gruber, 2000. "Risky Behavior Among Youths: An Economic Analysis," NBER Working Papers 7781, National Bureau of Economic Research, Inc.
  39. Taye Mengistae, 1998. "Wage rates and job queues: does the public sector overpay in Ethiopia?," CSAE Working Paper Series 1998-20, Centre for the Study of African Economies, University of Oxford.
  40. 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.
  41. 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.
  42. Hernaes, E. & Strom, S., 1995. "Heterogeneity and Unemployment Duration," Memorandum 28/1995, Oslo University, Department of Economics.
  43. 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.
  44. 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.
  45. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, May.
  46. 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.
  47. 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.
  48. 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.
  49. repec:fth:oxesaf:98-19 is not listed on IDEAS
  50. 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.
  51. 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.
  52. Geeta Kingdon & John Knight, 2004. "Unemployment in South Africa: the nature of the beast," Labor and Demography 0409003, EconWPA.
  53. Lynch, Lisa M., 1985. "State dependency in youth unemployment : A lost generation?," Journal of Econometrics, Elsevier, vol. 28(1), pages 71-84, April.
  54. 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.
  55. 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.
  56. 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.
  57. Foley, M.C., 1997. "Determinants of Unemployment Duration in Russia," Papers 779, Yale - Economic Growth Center.
  58. 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.
  59. 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 339-67, Oct.-Dec..
  60. Jonathan Gruber, 2001. "Introduction to "Risky Behavior among Youths: An Economic Analysis"," NBER Chapters, in: Risky Behavior among Youths: An Economic Analysis, pages 1-28 National Bureau of Economic Research, Inc.
  61. 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.
  62. 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.
  63. 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.
  64. 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.
  65. 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.
  66. Murphy, Kevin M & Topel, Robert H, 1985. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 370-79, October.
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.