The title of the proposal is

DETERMINANTS OF URBAN
YOUTH UNEMPLOYMENT
IN THE CASE OF WOLDIA TOWN
AMHARA REGION NORTH
WOLLO ZONE
 The proposal contains three chapter
the first chapter the introduction part
that includes background of the study
, statement of the problem , objective
of the study(general objective and
specific objective), research
question ,significant of the study,
hypothesis of the study
Scope of the study , limitation of the study
and the last organization of the study. The
second chapter includes literature review
part under this part definitions and
concepts of terms , theoretical literature
review(the classical theory of
unemployment ,implicit contract
theory ,efficiency wage theory, Keynesian
theory of unemployment, types of
unemployment and consequence of un
employment) and
 Empirical literature review also
included. The final chapter that is
chapter three the methodology part
of the proposal. That includes data
sources, sample design and procedure
,sample size determination , method
of data analysis , Quantitative data
analysis and model specification and
budget plan and time schedule
 1.1 Background of the study
Youth unemployment is a serious problem
across the world and it is a very crucial issue
that plays a vital role in a stagnation of
economic development of many countries.
It has been the most consistent problem
which is facing by all industrially advanced
as well as poor countries. The rate of youth
unemployment is often higher than the
unemployment rate for adults highlighting
the concerns that many countries.
• Youth’s unemployment is one of the indicators that have
been used to measure the extent of unutilized human
resource in the economy at a given area or region in a
certain period of time. It indicates the quantity and quality
of the human labor a nation or a region would have, and
should be used to promote its economic development, but
not actually used. Youth are the prime unemployment
concern globally because their numbers are growing in
most countries and because they are more prone to
violence than adults. In many countries it has increased
significantly in the last five years, after the global crisis.
There are several causes of youth unemployment such as
macroeconomic conditions, structural determinants, and
institutional features that concern both the labor market
rules and the schooling system.
• The major causes for this high unemployment in Amara region were reported
to be shortage of finance, lack of training, problem of work place, and
absence of license. The study area (WOLDIA TON) is the capital city of north
wollo zones in Amara region showed low achievement in creating job
opportunities and high youth unemployment. Accordingly, lack of credit,
absence of industry, shortage of sheds and lack of electric power were factors
responsible for this low job creation.
1.2 Research problem
• Youth unemployment is a serious socioeconomic problem in Ethiopia. And
youths are important driving forces for social, political and economic
development in any country. In Ethiopia, youth make up approximately 28.3%
of the population but the problem of youth unemployment is a central issue
of public discourse in Ethiopia. The prevalence of urban youth is still high as
compared to the total unemployment rate in urban area of Ethiopia. Since the
issue of youth’s unemployment is one of the most a critical issue in urban
Ethiopia, a genuine and adequate empirical analysis needed to be made on its
determinant factors because the adequacy of available researches is
questionable relative to the severity of unemployment. Significant differences
exist within the youth cohort across location (urban/rural), gender, and
education.
• According to the Region, Sex of youth, Age of youth, Literacy
status, marital status, Type of Training, Steps taken to search
work, Household size and Educational level are found to be the
significant determinants of youth unemployment in urban
Ethiopia. As it is shown from the different literatures, a
significant determinant variable for one researcher is found to
be insignificant variable for the other researcher even in the
same region. The methodologies that the researchers followed
were also questionable. This implies that there is obvious
research gap on the issue of the determinants of urban youth
unemployment. Besides, the rate of unemployment is showing
a dramatic growth in the recent five years. Therefore, the
intention of the researcher is to fill the research gap existed in
the issue of the determinants of urban youth unemployment
and to put forward policy implications to minimize the existing
dangerous youth unemployment.
• 1.3 Objective of the research
• 1.3.1 General objective
• The general objective of this study is to examine the characteristics and
determinants that affect youth unemployment status in urban Ethiopia with a
special emphasis on woldia town.
• 1.3.2 Specific objective
• To identify socio economic factors of urban youth unemployment in the study area
• To asses demographic factors that affect the employment status of youths in the
study area
• To evaluate the extent of association between the identified determinants and
urban youth unemployment in the study area
• To examine characteristics of urban youth unemployment in the study area
• 1.4 Research Question
• This study will attempt to address the following basic research questions at the end
of the study.
• What are characteristics of urban youth unemployment in the study area?
• What are the major determinants of youth unemployment in the study area?
• What are possible policy interventions to improve the employability of the youth?
• 1.5 Significance of the Study
• Urban youths’ unemployment has been a thoughtful socio-economic problem in Ethiopia
and it is more severe in the study area particularly. Since the major objective of this study
is assessing the factors that affect the employment status of urban youths, it will have the
following significance;
• The findings of the study will be helpful for creating superior awareness and better
understanding on the determinants of urban youth unemployment.
• The findings of the study will help policy makers in formulating strategies and
interventions that may help in lowering unemployment rate in different sectors of the
society.
• The finding will be also used as a benchmark for further studies that may be conducted in
related issues

• 1.6 Hypothesis of the study the proposal contains the following hypothesis
• Hypothesis1: Education negatively affects urban youth unemployment
• Hypothesis2: Work experience negatively affects urban youth unemployment
• Hypothesis3: Family size has a positive impact on urban youth unemployment
• Hypothesis4: Poverty has positive effect on urban youth unemployment
• Hypothesis5: Access to credit has a negative impact on urban youth unemployment
• Hypothesis6: Access to social network affects urban youth unemployment negatively
• Hypothesis7: Job training has a negative impact on youth unemployment
• 1.7 Scope of the study
• The purpose of this study is to analyze the factors that affect the employment status of urban
youth in a case of woldia town. Therefore, in the perspective of areal coverage, the research
encompasses in woldia town. Since there is not much formal employment in rural sides of the
study area and most people work in the traditional agricultural sector, it is difficult task for me
to get any rural data set. So, the study will not address the problem of rural youth
unemployment.
• In its factor analysis, though there are two major categories of determinants of unemployment
such as macro determinants and micro determinants, the research concentrates only micro
determinants of urban youth unemployment such as demographic and socio economic factors.
This is because it is wider task to measure the macro determinants unemployment for the
researcher at individual level. The demographic factors include age, gender, marital status,
migration status; while Socio- economic factors are youth’s educational qualification, work
experiences, job Preference, employment status of parents, and education qualification of
family head, family’s poverty status and entrepreneurial skill.
• 1.8 Limitation of the study
• Due to lack of willingness, some respondents may not give accurate or full information on
some socio-economic characteristics or may not be available for question. Hence the
researcher will prepare additional questioners for contingent responses.
• There may be outliers for some determinant factors in data collecting process. If so, the
researcher will drop these questioner having outliers and substitute with the contingent
questioners.
• It will be difficult to measuring income of household unless employed in a paid job. In order to
skip from such difficulties, the researcher will use poverty status of a household that could be
measured using multi-dimensionally.
• 1.9 Organization of the study
• The research will be organized into five chapters. The first chapter
covers background of the study, statement of the problem, objectives
of the study, significance and limitations of the study, and definition
of terms and concepts. The second chapter covers the review of
related literatures including theories of unemployment, factors of
youth unemployment, consequences of youth unemployment, and
trends of youth unemployment rate in urban Ethiopia, conceptual
framework, and hypothesis of the study. The third chapter
comprehends description of the study area, data source, study design
and sampling procedure, sample size determination, measurement
tools, method of data analysis and ethics of the research. Chapter
four will cover all about the discussion, analysis and findings of the
study. This includes both demographic and socioeconomic
characteristics of the respondents, differentials and determinants of
urban youth unemployment; and major findings of the study,
respectively. The last chapter will present summary, conclusion and
recommendations of the study.
• CHAPTER TWO
• REVIEWS OF RELATED LITRATURES
• 2. Theoretical Literature Review
• 2.1 The classical theory of unemployment
• The Classical approach assumes that markets behave as described by the
idealized supply-and-demand model: the labor market is seen as though it
were a single, static market, characterized by perfect competition, spot
transactions, and institutions for double-auction bidding.
• 2.2 Implicit Contract Theory
• The implicit contract theory specifically claims that labor contracts and
labor laws make it difficult for employers to cut the wage of their existing
laborers. Hence, during a recession in which businesses need to save costs
and optimize their operations, they usually choose to lay off their laborers
or downsize their workforce instead of implementing wage reductions.
2.3 The Efficiency Wage Theory
• The term “efficiency-wages” was introduced by economist Alfred Marshall
in his 1890 book “Principles of Economics” to indicate the equivalent
wage per efficiency unity of labor.
• 2.4 Keynesian theory of unemployment
• Keynes’ theory of employment is called the effective demand theory of employment.
According to this theory, unemployment arises due to the deficiency to effective demand and
the method of remove unemployment is to raise effective demand.
• 2.2.5 Types of unemployment
• There are three specific types of unemployment these are structural unemployment,
frictional unemployment, and cyclical unemployment. They provide a partial explanation of
the causes of unemployment
• • Structural Unemployment: Structural unemployment arises from the inability of the labor
market to provide jobs for every member of the workforce because of a mismatch between
the skills of the unemployed individuals and the skills requirements of specific jobs, or
because of technological advances in which people are replaced by machines or their skills
become outdated because of inability to keep up with latest trends.
• • Frictional Unemployment: Frictional unemployment occurs when an individual is in
between jobs. It corresponds to the time when this individual has to find another job after
leaving his or her employer or when he or she is transitioning from one job to another. Note
that this type of unemployment has some overlaps with structural unemployment. However,
its defining characteristic is that it is usually short-lived.
• • Cyclical Unemployment: Cyclical unemployment represents the offshoots of the business
cycle and the boom-and-bust cycle of the economy. Keynesian economics explains that the
frequent shifts in the business cycle and severe economic downturns, such as in the case of 
the Great Depression, lead to a shortage in aggregate demand that is not enough to provide
employment for everyone who wants to work.
• 2.3 Empirical literature review
• According to, reservation wage is negative determinant for both
general and adult unemployment; while it shows positive for youth
unemployment. Education shows significant impact on
unemployment .They also indicated that marital status, household size,
household asset, age; age squared, marital status, migration and
household size.
• According to the research made in Viet Nam on determinants of Youth
employment, social demographic determinants such as age, education,
ethnicity, and especially family economic status, found to be strong
significant factors affecting youth employment. To a large extent, they
define the supply-side structure of the youth labor market. In fact, the
family in which a young person lives is the strongest predictor of his or
her future in the job market. The significant effects of paternal
occupation, family economic status and youth educational level are
notable in the analytical results. The probability to work is reduced
when young people live in better-off families.
• Conceptual Framework of the Study
• For the purpose of this study, To conduct this study, both demographic and socioeconomic Variables are
taken as dependent variables while the employment status of the urban youth is the dependent
variable: The determinants are age, sex, marital status, education, work experience, social network
density, job preference, family characteristics such as employment status of family head and poverty
status of urban youth family.
Dependent Variable
Employment Status of Urban Youth
Independent variables
Demographic factors
• Age
• Gender
• Marital status
• Migration status
Socio- economic Factors
• Youth’s educational qualification
• Work experiences
• Job Preference
• Employment status of parents
• Education qualification of family head
• Family’s poverty status
• Entrepreneurial skill
• Access to credit
• Family size
CHAPTER THREE
3. METHODOLOGY OF THE RESEARCH
3.1. Data Sources
To attain the stated objectives, data will be collect both from primary and
secondary sources. A cross sectional primary data will collect from select
respondents in the study area through structure questionnaire. The
questionnaire will design in such a way that it could help the investigators
to dig out detail information on respondents demographic, social and
economic characteristics. Moreover, secondary data will also gather from
publish and unpublished documents obtain from necessary institutions so
as to generate additional information on the characteristics of
unemployment in the study area. The structured questionnaires will be
designed and formulated to collect information about demographic and
socio-economic determinants of urban youth unemployment from
sampled urban youth. This study is going to be conducted at individual
level and the sampling frame or the total population from which the
required number of sample drawn is the total number of urban youths
whose age is ranged from 15-29 and resides in the three kebele of woldia.
• 3.2 Sample Design and Procedures
• In order to select sample respondents, the researcher will employ a two-stage simple
random sampling technique.
• Firs stage: This is the stage of selecting sample kebele found in woldia town. To do this,
the researcher will use simple random sampling technique and select three sample
kebele from the study area.
• Second stage: This is the stage of selecting final respondents from the sampled kebele.
To do this, the researcher will employ a simple random sampling technique from the
sample frame that will be obtained the bureau of labor and social affairs on the list of
registered unemployed urban youths.
• 3.3 Sample Size Determination
• In order to determine a representative sample size from the selected kebeles, the
study used a sample size determination formula given by Yamane (1967). The relation
is given as below:
• n = N/1+N (e2) ………………………………….[1]
• Where ‘n’ is the representative sample size,
• N is the total urban youth population of the towns which is found to be
‘e’ is the desired level of precision. For a 95% confidence level, the researchers have
selected the representative sample.
• In order to determine the number of sample respondents from each those three
kebele, the researchers will apply the proportional sample determination technique.
• 3.4 Method of Data Analysis
• Descriptive and econometric analyses will employ to meet the main
objective of the study. In the case of descriptive analysis graphs, tables, and
chi-square tests have been employed. While in the case of econometric
analysis the binary logit model has been applied to identify the major
determinants of urban youth unemployment. As many econometric and
related literature recommended, specifying the association between a
dichotomous dependent variable and a set of relevant explanatory
variables, binary outcomes models are recommended to be appropriate
(Wooldridge, 2001). In the analysis, diagnostic tests will be used to sure
that the functional form of the model will appropriate.
• 3.5 Quantitative data analysis and model specification
• Throughout data collection, the checking of data quality will be made on
spot and data will be entered after manual editing and coding will be
completed. The software expected to allow consistency checking, double
gently and data verification which is useful to keep the quality at higher
level. For the analysis, stata analysis software SPSS will be used. The
Univariate analysis will be done to describe the respondent's demographic
and socio-economic characteristics and presented in a tabular and graphic
form.
• The dependent variable in the case of this study is a binary response variable i,e either
employed or unemployed. And according to, there are three approaches to developing a
probability model for a binary response variable:
• The linear probability model (LPM)
• The logit model
• The probit model
• The LPM model is easiest model to interpret since it employs a simple OLS regression
statistics to examine the relation between the dependent variables and the independent
variables. But it has the following limitations;
• The non-normality of ‘ui’
• Although OLS does not require the disturbances (ui) to be normally distributed, But the
assumption of normality for ui is not acceptable for the LPMs because, like Yi, the
disturbances ui also take only two values. Hence, they also follow the Bernoulli distribution.
• Heteroscedastic Variances of the Disturbances
• Even if (OLS) estimation assumes the disturbances term (‘Ui’) to be homoscedastic, LPM no
longer maintained this assumption.
• Nonfulfillment of 0 ≤ E(Yi | X) ≤ 1
• Since E(Yi | X) in the linear probability models measures the conditional probability of the
event Y occurring given X, it must necessarily lie between 0 and 1. Although this is true a
priori, there is no guarantee that Yi , the estimators of E(Yi | Xi ), will necessarily fulfill this
restriction, and this is the real problem with the OLS estimation of the LPM.
• To examine the association between
independent variables with the dependent
variable (youth employment status), the
bivariate analysis will be used. To do this, the
binary logit model will be employed
• Summary of explanatory variables and their
expected sign
Variable Values

Age Continuous variable

Sex 0 = female and 1= male

Marital status 0 = married and 1= otherwise

Education 0 = illiterate
1= primary education
2= secondary education
3= Higher education

Work Experience Continuous variable

Access of credit 0 = no any access for credit

1 = has access for credit

Family’s poverty status 0 =poor, 1 non-poor

Entrepreneur skill 0=have skill, 1=has no skill

Skill Match 0=skill mismatch, 1=skill match

• 4.1. Time Schedule
No Activity Date
   

1 Research topic selection May 8-May 12

2 Submission the topic for approval May 13, 2022

3 Topic approval May 13, 2022

4 Preparation of paper proposal May 14,2022 –June 3, 2022

5 Submission of final proposal June 5, 2022

6 Presentation of final proposal June 12 ,2022

• 4.2. Budget Schedule
No cost item Estimated budget in Ethiopia Birr
     

1 Stationary materials 800

2 Photo copy 200

3 Transportation cost 300

5 Internet Service 250

6 Contingency and miscellaneous expense 800

7 Secretary work 500

  TOTAL 2,850