DEPARTIMENT OF ECONOICS 2015 E.C.

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

A RESEARCH PROPASAL ON SOCIO-ECONOMIC IMPACT

OF UNEMPLOYMENT IN ETHIOPIA

PREARERED BY ID NUMBER

1. HABIB USHI----------------------------------------SSR/0451/13

2. MELAKU BELETE------------------------------------SSAD/219/13

3. EYASU BELAMO------------------------------------SSAD/127/13

4. ALEM TILAHUN--------------------------------------SSR/0076/13

5. MURIDA SHEMSU------------------------------------SSR/0715/13

6. RAHEL FEKEDE---------------------------------------SSR/0760/13

7. MESTEFA MOHAMMED------------------------------SSAD/248/13

8. OSMAN SEID-----------------------------------------SSAD/264/13

ADVISOR; MR. AMSALU B (MSc)

MAY,2015
WOLKITE, ETHIOPIA

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Contents
CHAPTER ONE..................................................................................................................1
1 INTRODACTION............................................................................................................1
1.1 Background of the study............................................................................................1
1.2 Statement of the problem...........................................................................................2
1.3 Research Questions....................................................................................................2
1.4 hypotheses of the study..............................................................................................2
1.5 Objective of the study................................................................................................3
1.6 Significances of the study..........................................................................................3
1.7 Scope of the study......................................................................................................3
1.8 Organization of the study...........................................................................................3
CHAPTER TWO.................................................................................................................4
2 LITERATURE REVIEW.................................................................................................4
2.1 Theoretical Literature Review...................................................................................4
2.2 Empirical Review......................................................................................................8
2.3 Consequences of unemployment.............................................................................11
2.4 Cause of unemployment..........................................................................................13
CHAPTER THREE...........................................................................................................16
3. RESEARCH METHODOLOGY..................................................................................16
3.1, Type and Source of Data........................................................................................16
3.2, Data Analysis..........................................................................................................16
3.3. Model Specifications.............................................................................................16
3.4. Explanation of the variables...................................................................................17
CHAPTER FOUR.............................................................................................................18
4 Time budget and cost budget..........................................................................................18
4.1 Time budget.............................................................................................................18
4.2 Cost budget..............................................................................................................19
REFERENCE....................................................................................................................20

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CHAPTER ONE

1 INTRODACTION
1.1 Background of the study

Unemployment can be defined as labor force idleness of wage earners who are able and
willing to work but, cannot find jobs. In the society in which most people earn their
means of living only by working for others, being unable to find job in serious problem,
because of its psychological cost and failure. The extent of unemployment is also used as
a measure of workers welfares. The proportion of workers unemployment also show how
well nations human resources are used serve an index of economic activities (Joseph in
Mills, 1992)
The measurement of unemployment is based on three criteria that must be satisfied
simultaneously, such as “being out of work,” “currently available for work” and “seeking
work”. The number of unemployment is then divided by the number of people in labor
force that is the sum of the employed and unemployed to get the unemployment rate
(ILO, 1983).
The severity of world’s unemployment problem is increasing from time to time. This
problem is very acute in developing countries like, Ethiopia. For instance, unemployment
rate is high in Africa in comparison with western countries. For instance, in Egypt in
2010 was 9.4%, in Mexico 5.5% in Tunisia 13.3% and in Ethiopia 18% among the
economically active people 750 thousands 2.5% were unemployed. (Encyclopedia
Defuse, 2004)
Unemployment causes different economic and social problem like people’s failure to
provide adequate food for them, facing increasing pressure to provide infrastructure like
road, telecommunication, electric power, health sector, education sector, water supply. In
addition to this Malthus predicted that it population is left unchecked increase
geometrically, but food production increased only in an arithmetic progression.
Accordingly, in sub-Saharan Africa bring about huge unemployment without significance
increase in resource. In Ethiopia the problem of unemployment is highly pronounced in

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urban centers than that of rural areas, due to the process of urbanization which
encourages people to move from rural to urban. Unemployment in Ethiopia measured

based on the assumption that there is full employment in rural area and unemployment is
exclusively an urban phenomenon. Accordingly, among economically active urban
population of Ethiopia about 7% in 2002 and 15% in 2050 were unemployed (CSA,
2010).

1.2 Statement of the problem

Unemployment is a big problem in poor countries, and Ethiopia is one of them. This is
happening because many people are moving from rural areas to cities, there aren't enough
jobs available, and education levels are low.

When there are a lot of people without jobs, they earn less money. This means they can't
save much, and saving money is important for investing and creating new businesses.
Unemployment doesn't just affect the economy, though. It also causes social and
psychological problems like crime, addiction, less involvement in society, health issues,
problems with education, and feeling hopeless.

This study aims to fill this gap by analyzing existing secondary data to examine the
enduring effects that has looked specifically at unemployment in Ethiopia. So the
researchers wants to study how unemployment affects the town's economy and society.
They hope to find ways to reduce the impact of unemployment and fill the gap in
research.

1.3 Research Questions

 What are the economic impacts caused by unemployment in Ethiopia?
 What are the psycho-social impacts caused by unemployment in Ethiopia?

1.4 hypotheses of the study

 High rate of unemployment result in the low income of an individual in Ethiopia.

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 High rate of unemployment caused many socio-economic problems such as; low
level of education, health, crime, pessimism, addiction, low social participation,
and malnutrition in Ethiopia.

1.5 Objective of the study

1.5.1 General objective of the study

The general objective of this study is to evaluate the socio-economic challenges

associated with unemployment in Ethiopia.
1.5.2 Specific objectives of the study
The specific objectives of this study are the following:
 What is the psycho-social impact caused by unemployment in Ethiopia?
 What is the economic impact caused by unemployment in Ethiopia?
 How does unemployment contribute to the level of crime in Ethiopia?

1.6 Significances of the study

This study can offer several potential advantages. Firstly, it can provide valuable insights
to the government regarding the issues of unemployment and the socio-economic
performance of Ethiopia. Secondly, the study can offer guidance on the necessary policy
measures that should be implemented. Lastly, it can assist policymakers in developing
effective strategies to alleviate the problem of unemployment in the town.

1.7 Scope of the study

This study explores the socio-economic issues of unemployment in Ethiopia, focusing on
its impact on education, health, crime rate, self-confidence, and income of residents. The
study encompasses the period from 2005 to 2007 E.C.

1.8 Organization of the study

The study is organized into four chapters. The first chapter consists the introduction part
which contains the background of the study, the statement of the problem, hypotheses,
the objectives of the study, significance of the study, scope of the study, while chapter
two consists theoretical and empirical literature reviews which related to the title and
chapter three contains methodologies and chapter four contains the work plan.

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CHAPTER TWO

2 LITERATURE REVIEW
2.1 Theoretical Literature Review
2.1.2 Theories of unemployment
1/ Classical theories of unemployment
The essential features of the theory are that, labor market force of supply and demand
responds to change in real wage. Unemployment is the congruence of real wage and
remaining too high to allow the labor market to clear. Government wage regulation and
especial power full trade union are identified as significant causal factor. Thus
unemployment in classical system relies upon market not clearing the poling prescription
from classical analysis of unemployment that reduces government regulation and reduces
trade union power to make the labor market competitive (Adam Smith, 2000).
2/ Neoclassical theories of unemployment ‘
The most sufficient statement of the neoclassical position on unemployment in
underdeveloped countries attributed of developing the problem to the failure of
government of developing countries to allow the changing factor endowment of solicit to
be heard over time by permitting close relationship between the market price of the factor
of production and their equilibrium level (Godfrey,2000)
Neoclassical economies are concentrated on the so called “choice of techniques” by
explaining unemployment as technical problem of “cost minimization”. Thus this
approach avoided focusing on the social process which determines the incorporation of
labor power in to production; labor and capital are viewed as factors of production as
objects and not as social relation with one another. Unemployment is explained either as
a result of factors of process, i.e. in relation cheapness of capital in relation to labor or in
terms of technological consideration related to the non substitutable of capital for labor or
what has been denominated as the factor proportion problem (IBID).
3/ Keynesian theories of unemployment

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Kaleck implicitly agrees when he say that the problem of unemployment in under
developed countries differs fundamentally from that developed capitalist economies. In
the later unemployment arises on account of in adequacy of effective demand. During
period of depression unemployment labor coexists with underutilized equipment. The
duration may therefore, he tackled by measures designed to stimulate effective demand
such as loan financed, government expenditures, unemployment and underemployment in
developed countries than from deficiency of effective demand ( Godfrey, 1986)
2.1.3 Types of Unemployment
Economists commonly identified four types of unemployment. Frictional unemployment,
cyclical unemployment, seasonal and structural unemployment
1/ Frictional unemployment
Frictional type of unemployment results from permanent shift in the pattern of demand
for goods and services and also arises because workers seeking jobs do not find them
immediately while looking for woke, they are counted as unemployment on the hand this
types of unemployment is arises because markets are in recently dynamic because
information flow are other fundamental economics (2000).
2/ Structural unemployment
Structural unemployment is arising from the imbalances between the kind of worker
wanted by employers and the kinds of workers looking for job. the imbalance may be
caused by in adequate in skill, location or personal characteristics, technological
development, for example, necessitate new skill in many industries leaving those
employers who are under unwilling litter or no experience may be unable to get be job,
because employer belief that these employers would not produce enough to be work
paying the legal minimum wage or the rate agreed on with the union. structural type of
unemployment shows up most prominent in some city, in some occupation or industries
for those with below average educational attainments for some other group in the labor
force.( Encarta, 2003) when, the structural unemployment and Frictional unemployment
sum together it is expressed as a percentage of total labor force. The ration is known as
the natural rate of unemployment.
NRU=100(FU+SU)/LF SU-Structural unemployment
Where, NRU- Natural rate of unemployment LF-Labor force
FU-Frictional unemployment (grade 11th economics book)
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3) Seasonal unemployment
A seasonal type of unemployment comes and occurs with seasons of they in which the
demand for particular jobs and falls. For instance construction workers can only during
warmer months. They are unemployed during winter and summer seasons. It also occurs
at end of the school year in June, when large number of student and graduate part look for
work (ibid).
4/ Cyclical Employment
This type of unemployment is related to business flections. It is defined as unemployment
associated with changes in business condition primary recessions, and depressions. The
most of this to type is the result of layoff. In other word it is the result of decline of real
GNP during the period of recession or at any period when an economy fail to operate at
its full potential. Also the cyclical unemployment raises when employment falls because
of insufficient aggregate demand as total spending and output falls. This rise
unemployment was assign that the increased unemployment was largely a cyclical (IBID)
2.1.4 Inflation and unemployment
There are an inverse relationship between inflation and rate of unemployment in the
economy. The more the entrepreneur extends the unemployment opportunity, the more
they have to payment to that particular factor of production in order to maintain the
profitability of a product the interpreter will inflate the price of a product.
Fisher and Dornbush (1998) argued as when an economy operates above full employment
to raise. The law of unemployment rate thus translates in potential and slack in the labor
market will tend to be deflation. This relation is captures by Philips curve linking
inflation and unemployment rate. Although Philips represented his findings as empirical
regulatory, economists quickly come to view the relationship as representing tradeoff
between inflation and unemployment rate (Miler, 1999-2000 edition).
Keynes 1996) argued that with the unemployment resources money wages would be
more or less constant but at the low level of unemployment money wage would stand to
rise as bottle needs occurred in the labor market As full employment was reached money
wage would rise rapidly as employers competed vigorously with each other for the
existing workers (Dornbush and fisher 1998)
2.1.6 Cost of unemployment

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Although out measure of unemployment is not perfect, they are liable index to serous
macro problem and unemployment statistics tell us that millions of people are jobless that
may be all right for the day or even a week. But if you need income to keep body and saw
together prolonged unemployment can hurt, typically unemployed person must rely on a
combination of saving income from other members of family and government
unemployment benefit to financial support. Accordingly there are two cost of
unemployment lost in output effects on distribution of income.
A/Last input’; this cost is because resources are idle because of sufficient resources
factories will be idle working under efficiency investment will be idle. This situation is
expressed when unemployment is high (Mish Kin 1982).Dornbush (200) estimated his
losses in output 3% of GDP amounting to losses measured in hundreds of billions of
dollars.)
B/Effect of distribution of income; costs of unemployment are born unevenly. In other
wards the costs of recession are born disproportionally by those who lose their jobs.
Dornbush (2002) has given college students who have difficult in starting career. The
(mish Kim 1998) has also a demand to the above costs of unemployment case much
human mystery with families serving financial distress, lost of personal set respect and
increase in crime.
More over the following Macro effects accrued due to the unemployment
- Losses of output to the economy
- Losses of tax revenue
- Increases in government expenditure
- Loss of profit (Dornbush, 2002)
2.1.7 Urban Unemployment
Urban unemployment rate appear to be a low in developing countries, as they conceal the
high rate of unemployment that constitutes the very crux of the development crisis in
many developing countries. The challenges facing the developing countries today is to
cope with the adverse consequence of rapid urbanization which include deteriorating
living environment and high unemployment (Dornbush, 1998)
2.1.8 Labor mobility and unemployment
The momentum of workers, labor mobility is one of the striking features of labor market.
In the real world, labor productivity and level of human capital, family circumstance and
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personal attitudes towards non-wage amenities is low. These changes induce same
workers to switch employers, occupations, employers respond to changing economic
circumstances by using transferring closing or discharging workers. Closing or expanding
present facility or moving operation to new locations. The major determinants of
migration include; age, structure family factors, education distance, unemployment and
unemployment rate. The general unemployment rate does not always, reflect the
probability that specific individual will find employment. In addition, immigration itself
can increase unemployment rate at the destination. Nevertheless, generalization is
possible currently unemployed workers tend to migrate to destination with lower than
average unemployment rate (Todaro, 2006).

2.2 Empirical Review

2.2.1 The state of unemployment in developing countries
According to Todaro (2006), today many developing countries are plagued by a historical
unique combination of massive rural urban population movement, that stagnating
economy and unemployment growing. Substantial unemployment in LDCs economies is
probability one of the most striking symptoms of their in adequate development in a wide
spectrum of poor countries, open unemployment especially in urban areas affect the labor
force, because of its relation to the population of third world’s poverty.
One of the major consequence of rapid urbanization process has been the burgeoning of
supply of job seekers in to both the modern (formal) and informal sector of urban
economy. In many developing countries, the supply of workers exceeds the demand
which is a result of being extremely high rate of unemployment and under employment in
urban area. Some empirical data by Todaro (2003) represents the unemployment rate is
high in developing countries. The below figure also shows the unemployment rate which
was taken as an example from ten country’s of developing countries.

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Table 2.1 urban unemployment rate in the developing countries (2000-2005)

Countries Year Rate of unemployment
Algeria 2000 10.8
Argentina 2000 15.5
Barbados 2001 10.5
Chile 2003 5.3
Colombia 2004 8.5
Egypt 2005 5.5
Jamaica 2001 12.6
Morocco 2004 14.7
Ethiopia 2001 17.9
Source; CSA (2005)
As this table shows in the above, the major affecting unemployment problem is high in
Ethiopia, Jamaica, Algeria and Argentina respectively (Todaro, 2003).
As Todaro (2003) suggested, the rural urban migration is also other causes for the
ongoing problem of unemployment in LDCs. In this context, slowly growing of urban
employment opportunities accompanied by a disproportionately high rate of rural-urban
migration that the chronic urban unemployment and under employment problem has
emerged in developing countries in Africa. However the above suggestion on the causes
of unemployment by the different authors are more or less acceptable educational system,
non-look status of the society in adequate attention to agriculture and ever growing rural-
urban migration are some form that causes problem in LDCs. this unemployment
problem causes absolute lack of useful things that might be done and also shortage of
modern jobs in relation to the number of jobs seekers. Different economists and policy
makers recommend different strategies and policies to eliminate the problem and improve
employment in LDCs. (Edward, 2000) recommended that product mix, appropriate
technologies use of capital and rural-urban balance of job opportunities are among the

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major strategies to eliminate the massive unemployment and improving employment

opportunities in LDCs.
G.M. Ishumi (1999) argued that the growing urban unemployment in LDCs, is closely
connected with the high rate of urbanization and population growth in recent year; As the
problem continues to be serious hardship in the nation, government has attempted to
tackle the problem on a number of fronts and policies, such as promoting information
sector, expanding labor intensive and investment packaging in favor of unemployment.

2.2.2 Population and unemployment

Impact of population growth on unemployment occupies a very important place. Some
studies indicate that rapid population growth rate is the problem of unemployment. The
situation is well expressed by ILO; it estimates that before the East Asian crisis. The
number of unemployed people throughout the world has about 140 million people. In
that, they were seeking and available for work but could not find it. by the end of 2000,
this figure would have risen to 150 million. In addition to this, about 25-30% of the
world’s labor forces are under employed, i.e., either working substantially below full time
but wishing to work longer or earning less than living wage (ILO, 2000)
The fundamental factor underlying the unemployment problem may labor surplus
economics in the option of some development economy is their high rate of population
growth. The high rate of population growth contributes to a particular disparate type of
rural-urban migration and with its attendant problem for government of urban
unemployment and crime (Koehler, 2008).
2.2.3 Education and unemployment
The demand for education through the secondary level will be inversely related to the
current unemployment rate among secondary school graduate unities. In order for poor
countries and poor people to take the advantage of new opportunities, the global UNDP,
20005 HDR reports that, first it must be understood that skill matter more than ever to
day’s move completive global market. Ethiopia needs to develop domestic capacity to
identify technologies potential benefit and to adopt new technology to its needs and
constraints. Ethiopia’s education achievement compared to other developing countries is
however, extremely poor, this is because of low income of individuals due to
unemployment and other factors exists in poor nation (Befikadu and Birhanu Nega 2000).
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Table 2.2 Participation in education taken as an example from four countries

Country Pri-Primarily(%)of Primary% of relevant Secondary % of
revetment age group age group element age group)
2006 2007 2008 2006 2007 2008 2006 2007 2008
Ethiopia 5 5 15 20 25 28 8 10 15
Sudan 15 16 40 41 41 10 12 13 14
Kenya 34 36 35 75 80 80 20 24 24
SSA 12 13 79 77 78 73 13 27 28

Source; Befikadu and Birhanu, (2008)

2.2.4 Migration and unemployment

Many developing countries face serious population problem as a result of high rate of
population growth. Many countries currently consider migration and population
distribution as one of their major problems. For the countries whose economic
development is staggering or slowing, rapid growth of the urban population has been
largely a source of problems that excessive concentrations of population in primate cities,
further strain service and infrastructure this problem causes serious problem of
unemployment in the cities (Pernia, 1998).

2.3 Consequences of unemployment

Persistently high unemployment creates huge costs for individuals and for the economy
as a whole. Some of these costs are difficult to value and measure, especially in the long
run social costs. These costs are defined as follows;
1/ loss of income; unemployment morally results in a loss of income. The majority of the
unemployment experience decline in their living standard and are worse off out of work.
This leads to a decline in spending power and the rise of falling in to debt problem. The

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unemployment for example may find it difficult to keep up with their mortgage
repayment.
2/ Negative Multiplier effects; the closure of a local factory with the loss of hundreds of
jobs can have a large negative multiplier effect on both the local and regional economy.
One person’s spending is another’s income, so to lose well-paid jobs can lead to drop in
demand for local services, down ward pressure on house prices and second round
employment effects for business supplying the factor or plant that closed down.
3/ Loss of national output; unemployment involves a loss of potential national output i.e.
GDP, operating well below potential and is a waste of scarce resources. If some people
choose to leave the labor market permanently because, they have lost the motivation to
search for work; this can have a negative effect on long run aggregate supply and there by
damage the economy’s growth potential. Some economists call this the “hysteresis
effect”. When unemployment is high, there will be increases in spare capacity, in other
words the output gap will become negative and this can have deflationary factors on
prices, profits and output.
4/ Fiscal costs; The government losses out because of a fall in tax revenue and higher
spending on welfare payments for families with people out of work. The result can be an
increase in the budget deficit which then increases the risk that the government will have
to raise taxation or scale back plans for public spending on public and merit goods. The
problems facing the UK government at the moment are closing linked to the surge in
unemployment.
5/ Social costs; rising unemployment is linked to social deprivation. For example, there is
a relationship with crime and social dislocation including increased divorce rates,
worsening health and lower life expectancy. Regions that suffer from persistently high
long run unemployment see falling real incomes and a widening of in equality of income
and wealth.
2.3.1 Income effect of unemployment
Unemployed people and their families must continue to pay liking costs when their
income cut. Non-discretionary expenditure such as insurance, housing payment utility
bills and tax takes a large part of some unemployed people’s saving especially after their
eligibility for unemployment compensation is enchased. The loss of medical insurance
coverage resulting from unemployment is a major financial problem for families in case
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of illness accident for pregnancy. The loss of income means reduction in buying power
and living standards for the unemployment and their dependants. The drop in income of
the employment also hurts other who is not unemployment. Reduced spending means
lower receipts for retail merchants, manufactures, workers and other in the chain of
population. As we have seen each person’s income generally depends on someone else
spending. unemployment reduces the revenue of federal state and local government while
adding to their job are more likely to suffer from malnutrition, child abuse and behavior
problems than children of working parents (Ibid).

2.3.2 Social effect of unemployment

Unemployment may social as well as economic cost. When people loss their job
especially when they cannot find other for extended period, they tend to become
depressed and their wealth suffers. Suicides increases, families breathe up and there is
more child abuse. A study by Harley Brenner of the Johns hooking university, school of
hygiene and public health show that for every 1% increases in the unemployment rate,
there is 1.9% increase in the unemployment rate death from stress related diseases, a
4.1% increases in suicides, a 5.7% increases in homicides and a 4% increases in
commitments to state prisons. Other studies have found that the mental and physical
health of the spouse and children of unemployed also affected. Urban-rural migration in
Ethiopia consists of periodic return migration coinciding with peak agricultural activities
mostly by unemployed people, retirees or unsuccessful urban migrants. The 1994 census
shows that such migrant comprised only 2.0% of total population, while 2004 census
shows 1.3%. This increase in the proportion urban rural migrants during the ten year
period translates to 392 thousands additional people who left urban areas due to
increment of unemployment created by migrants (Ibid.)

2.4 Cause of unemployment

The exact causes of unemployment will always be disputed, because, there are numerous
predictions, theories of explanation put forth by economists. In the Keynesian theory of
macro economics state that, unemployment is resulted from increasing in demand rates

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while the economy operates below growth rate and potential rate. In this cases the causes
of unemployment is defined as follows;
1/ Economic inflation; inflation is one of the oldest causes of unemployment. A state’s
economy faces steep rise in prices as compared to other economies of the world. This
leads to failure in exports as companies are notable to operate with others due to rise in
price. Income supper, people’s saving fall and gradually companies start fringe people,
being unable to pay than on due time. Thus the rate of unemployment increases.

2/ Economic Recession; recession become one of the prime causes of unemployment in

the US in the year 2007. It become a global crisis where in the rate of unemployment
knew no bounds. A Severe financial crisis hit almost all countries throughout the world.
Rise in unemployment and since die of established companies become a regular affair,
people remained unemployment till the economies regained stability.
3/ Welfare payments; It is although are security measures for people causes
unemployment to some extent. The aids given by government to the unemployment
people actually reduce their willingness to work. This is an indirect negative impact of
extended unemployment benefits, because people become more dependent on the grants
they receive. They register for government grants even if they are not looking for jobs,
and the incentives they get are enough to fulfill their daily requirements. In this way
people remain deliberately unemployed.
4/ Changing technology; since technology keeps advancing with passing days, most
companies look for a change in work force. Although, they denote fire people randomly
they hire people having specialization in the advanced techniques. A kind of unbalance is
caused when they stop in evolving their own employees in major areas of production and
development. This gives rise to frustration in work and many tend to resign. Thus that job
cuts due to, changing technology elevates rate of seasonal unemployment.
5/ Job Dissatisfaction; is quant essential for self progress and gaining stability in work.
There are many people who are taking up jobs on temporary basis. The reasons are being
family pressure, financial crisis and for experience some of problems. However a person
who is not contented with his job can never continue it in the long run, because he is
either making a compromise with his pay scale or his job profile. Thus job dissatisfaction
becomes one of the primary causes of unemployment.
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6/ Employee values; often employees are not given the due recognition for their good
performance and dedication. This creates an unfavorable work environment, which
further denominates employees, when values of employees are neglected by the
organized; they lose interest in the work. It becomes an indirect way of compelling
employees to leave their jobs. People remain unemployed until they find a good job.
7/ Racial Discrimination; still prevails in many organizations. It’s one of the most serious
causes of unemployment. People who are not citizens of that particular country remain
unemployed due to discrimination on grounds of race, religion, cost and ethnicity. It
becomes very difficult to find out a decent job under such circumstances. Thus earning
many for survived becomes difficult and ultimately they are forced to leave the country
as (WB), and independent evaluation group (IEG) has reported

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CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1, Type and Source of Data
The data will use secondary data for this study. Using appropriate data collection
instruments enables researchers to leverage the strengths and address the limitations of
data sources, thereby minimizing the risk of drawing irrelevant conclusions. Accordingly,
this study would collected from Central Statistical Agency of Ethiopia (CSA), Ministry
of Labour and Social Affairs (MoLSA) , African Development Bank (AfDB), and World
Bank (WB).

3.2, Data Analysis

The data collected from different sources will be organized in a manageable way to make
discussion easy. The analysis of data will use descriptive.

3.3. Model Specifications

unemployment at the aggregate level, specified at the function of some relevant variables
was employed in the econometric modeling of the level of unemployment. Therefore, the
model is mainly concerned with identifying the effect of unemployment in Ethiopia with
respect to its main determinants.
The equation of regressions on this study is generally built around two sets of variables,
namely dependent variable (unemployment) and independent variables (education
attainment, age distribution, gender composition, and population growth rate.) The basic
objective of using regression equation on this study is to make the study more effective at
describing, understanding and predicting the stated variables.
Therefore, in this particular study the trade balance function will have the form:
UE= F (Edu, Age, Popn) or
understanding,+  2 Age +  3 Popn + β4Gender +e
Where UE= Unemployment

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Edu = Education attainment

Age = Age distribution
Popn = Population
Gender = Gender composition
e = Error term

3.4. Explanation of the variables

3.4.1. The Dependent Variable
Unemployment impact is typically the main dependent variable in our model. It
represents the percentage of the labour force that is unemployed and actively seeking
employment.
3.4.2 The independent variable
The independent variable is used to explain and predict changes in unemployment. There
variables can include education attainment, age distribution, gender composition, and
population growth rate.

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CHAPTER FOUR

4 Time budget and cost budget

4.1 Time budget

This study will be conducted within total of four months from the month of may title
submission and selection, thorough various advisory consultants up to the month of
august presentation of the study finding. The activities to be performed with in these four
months and their associated time are as follows for the year 2015.

No Activities May June July August September

1 Title selection and submission 

2 Literature review 

3 Proposal development in 
consultant
4 Submission of proposal 

5 Data collection  

6 Data analysis and processing 

7 Report writing  

8 Submission of report 

9 Presentation of the finding 

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 DEPARTIMENT OF ECONOICS 2015 E.C.

4.2 Cost budget

This shows how much it will cost to conduct the research. I state cost of every budget
items that should be quantitatively shown typically, our proposal cost budget reflects
costs such as: - personnel consumable supplies, travel, communication, publication and
so on
No Item Quantity Per unit cost(birr) Total cost(birr)

1 Paper 150 1.5 225

2 Pen 4 20 80
3 Flash disc 1 (4 GB) 160 160

4 Transportation 4 times 250 1000

5 Internet 750MB 0.73 55

6 Typing 65 pages 10 650

7 Printing 65 page 1.75 113.75

8 Miscellaneous 50
Total 2333.75

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 DEPARTIMENT OF ECONOICS 2015 E.C.

REFERENCE

o Ayele kurise, (2003), introductory economics third edition

o Befikadu Degefe and Birhanu Nega, (1999/2000) annual report on the
Ethiopian economy. Volume one.EEA, Addis Ababa, Ethiopia.
o Charles Johnson, 2008, Alternative measures of unemployment rate.
o Godfrey M, (1986) the new challenges to economic theory.
o Macro-Economic today 1999-2000 edition.
o Dornbush and fisher, start of 1998 macro economics, eight editions.
o Jacobson, (1996), technical change of employment and technical
dependence, Sweden.
o Sampat Mukherjee (2006) refresher in course economics, new central book
agency.
o Malthus, entitled Mukherjee (2006) refresher in course economics new
central book agency common wealth publisher.

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