NEW GENERATION UNIVERSITY COLLEGE NEKEMTE CAMPUS

COLLEGE OF BUSINES AND ECONOMICS

DEPARTEMENT OF ECONOMICS

DETERMINANTS OF YOUTH UNEMPLOYMENT IN CASE OF NEKEMTE TOWN

A SENIOR ESSAY SUBMITTED TO DEPARTMENT OF ECONOMICS IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE BACHELOR OF ART
(BA) IN ECONOMICS

NAME OF GROUP MEMBERS ID.NO

1. BEKANA ALEMAYEW…………………………16605/10
2. ALEMU WAKO…………………………………..16801/10
3. GADISE TADESSE………………………………17379/10
4. BELAYNESH JEMA……………………………..16650/10
5. MEGERSA ABERA………………………………17004/10

ADVISOR

JUNE 2020

NEKEMTE, ETHIOPIA
1
Acknowledgement
First of all, we would like to express our deepest gratitude to our God and our beloved advisor
Misganu D. (BA) for his advice, follow up, constructive comments and positive attitude during
the preparation of this research paper.

Next, we would to say thanks to Nekemte Municipal city office, youth and sport office for giving
us necessary information during preparation of research paper.

Lastly, but not least we like to give our innumerable thanks to department of economics by
supporting us on different angles for the preparation of this research paper.

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 TABLE OF CONTENT

Contents Pages
Acknowledgement........................................................................................................................................i
TABLE OF CONTENT.....................................................................................................................................ii
List of Tables...............................................................................................................................................iv
Abstract.......................................................................................................................................................v
Acronyms....................................................................................................................................................vi
CHAPTER ONE..............................................................................................................................................1
INTRODUCTION...........................................................................................................................................1
1.1. Background of the Study..................................................................................................................1
1.2 Statement of the Problem.................................................................................................................2
1.3. Objectives of the Study.....................................................................................................................3
1.3.1. General Objective......................................................................................................................3
1.3.2 Specific Objectives....................................................................................................................3
1.4. Significance of the Study...............................................................................................................4
1.5. Scope and Limitation of The Study...................................................................................................4
1.5.1. Scope of the Study.....................................................................................................................4
1.5.2. Limitation of the Study..............................................................................................................4
1.6. Organization of the Study.................................................................................................................4
CHAPTER TWO.............................................................................................................................................5
2. REVIEW OF RELATED LITERATURE...........................................................................................................5
2.1. The Theoretical Literature Review....................................................................................................5
2.1.1. Definition of basic terms............................................................................................................5
2.1.2. Types of Unemployment............................................................................................................5
2.1.3. Youth Unemployment...............................................................................................................6
2.1.4. Characteristics of Youth Unemployment...................................................................................7
2.1.5. Causes of Youth Unemployment...............................................................................................8
2.1.6 .Consequences Of Youth Unemployment...................................................................................8
2.2. Empirical Literature Reviews............................................................................................................9

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 2.2.1. Empirical Literature Reviews.....................................................................................................9
2.2.2. Youth unemployment in developing countries..........................................................................9
2.2.3. Ethiopian experiences..............................................................................................................10
CHAPTER THREE........................................................................................................................................11
3. METHODOLOGY OF THE STUDY.............................................................................................................11
3.1. Description of the Study Area.........................................................................................................11
3.2 Methodology of The Study..............................................................................................................11
3.2.1 Data types and sources.............................................................................................................11
3.2.2. Method of data collection.......................................................................................................12
3.2.3. Sampling techniques................................................................................................................12
3.2.4. Sample size..............................................................................................................................12
Table 3.1 Summary of sample size determination in selected Kebeles.........................................13
.......................................................................................................................................................13
3.2.5 Method of data analysis...........................................................................................................13
CHAPTER FOUR..........................................................................................................................................14
4. DATA ANALYSIS AND DISCUSSION.........................................................................................................14
4.1. Descriptive analysis of data............................................................................................................14
4.1.1 Demographic characteristics of respondents............................................................................14
4.1.1.1 Sex composition of respondents........................................................................................14
Table 4.1 sex composition.............................................................................................................14
4.1.1.2 Age composition of respondents.......................................................................................15
Table 4.2 Age composition.............................................................................................................15
4.1.1.3 Marital status of respondents............................................................................................15
Table 4.3 marital statuses of respondents.....................................................................................15
4.1.1.4 Educational status of respondents.....................................................................................16
Table 4.4 Educational levels of respondents..................................................................................16
4.1.1.5 Original residence of respondents.....................................................................................17
Table 4.5 Original residence of respondents.................................................................................17
4.2 Impacts of population growth on youth unemployment.................................................................17
Table 4.6 Impact of population growth on youth unemployment.................................................17
4.2.2 Work experience and skill of respondents................................................................................18
Table 4.7 work experience and skill of respondents......................................................................18

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 4.2.3 Reason for unemployment of youth respondents....................................................................18
Table 4.8 Reason for unemployment of youth respondents.........................................................18
4.2.4 Non-economic characteristics of respondents.........................................................................19
Table 4.9 Non-economic characteristics of respondents...............................................................19
4.2.5 System of administration characteristics of respondents.........................................................19
Table 4.10 Administration system of respondents........................................................................19
CHAPTER FIVE............................................................................................................................................20
CONCLUSION AND RECOMNENDETION.....................................................................................................20
5.1 Conclusion.......................................................................................................................................20
5.2 Recommendation............................................................................................................................22
REFERENCES..........................................................................................................................................24
APPENDIX..................................................................................................................................................26

List of Tables
Tables pages

Table 3.1 Summary of sample size determination in selected Kebeles.

Table 4.1 sex composition
Table 4.2 Age composition.
Table 4.3 marital statuses of respondents.
Table 4.4 Educational levels of respondents
Table 4.5 Original residence of respondents
Table 4.6 Impact of population growth on youth unemployment
Table 4.7 work experience and skill of respondents
Table 4.8 Reason for unemployment of youth respondents
Table 4.9 Non-economic characteristics of respondents
Table 4.10 Administration system of respondents

iv
Abstract

Youth unemployment is the most serious problem which can greatly affect the development of a
nation. Even though youth should contribute for the wellbeing of their country, but most of them
remained unemployed. This study tries to identify factors that determine youth unemployment in
Nekemte town. Therefore the major concern of study is to identify the major social-economic,
political and institutional factors that affect the youth unemployment in Nekemte town. In the
journey of the study, both primary and secondary data were collected. Primary data was
collected by structured questionnaire from the sample of 121 youth by multi stage sampling
technique and secondary data was collected from concerned organization in the study area.
Analysis of the study would be conducted by descriptive statistics. Depending on the analysis of
the study conclusion and recommendation were given to all concerned body of the town to
reduce youth unemployment within the town.

v
 Acronyms
• AIDS-Acquired Immune Deficiency Syndrome

• CSA-Central Statistics Agency

• HIV-Human Immune Virus

• ILO-International Labor Organization

• KMs-Kilo Meters

• TEVT-Technical Education And Vocational Training

• UN-United Nation

vi
 CHAPTER ONE

INTRODUCTION
1.1. Background of the Study
Youth unemployment is the unemployment of young people defined by the year 15-24.Youth
unemployment and under employment represents growing concern worldwide (UN, 2013).

According to International Labor Organization (ILO, 2013) estimates, youth in 2002 made up
41% of the world unemployed population. Young worker everywhere have much high rates of
joblessness and much lower earning than the older workers. In many contexts young people are
also concentrated in low skill informal work or in hazard and anxious form of work that are not
suited to their age and experience. Employment outcome are typically the worst for child and
other early schools leaves group which have the least opportunity to accumulate human capital to
gain full employment (Gaulio Rozart, 2007).

According to 2008 global trends of employment for young report in the decade between 1997
and 2007,unemployment worldwide increased from 10.9% to 11.9%,while the global adult
employment ratio stayed level at 4.2% from 1997 to 2007 (ILO,2008).

From the second quarter of 2008, the youth unemployment rate has taken an upward trend
peaking in 23.9% in the first quarter 2013 before receding to 19.7% at the end of 2015. The EU-
28 youth unemployment rate was systematically higher than in the euro area between 2000 and
mid-2007 (Eurostat, planned article: 2 march 2016).

Today, worldwide contains an estimate 1.2 billion people aged between 15 and 24 years with an
increase 17% compared to 1995, that is 24% of the world working age population (ILO, 2012,
UN, 2013).

In Africa also youth unemployment is too high. For example in Tunisia, 40% of university
graduates are unemployed (UN, 2012).

African countries define youth as someone from as young as 15 to someone well into their mid-
thirties, which varies from the standardized definition of United Nations .African has the

1
youngest population more than any continent which means that the problem of youth
unemployment there is particularly relevant. Approximately 200 million people in African are
between the ages of 15-24. This number is expected to double in size in the next 30 years.
Between 2001 and 2010, countries in Africa reported some of the world’s fasted growing
economies (The UN Focal Point for Youth, 2012).

Youth unemployment in Ethiopia is a chronic problem which is leading to political, social and
economic instability throughout the country. The youth population in Ethiopia is projected to
grow in absolute terms from about 15 million in 2005 to 26 million in 2013 but, would remain at
about one fifth of overall population during this period (CSA, 2007).

Unemployment in Ethiopia has markedly declined since 1999 both for youth and for the
economy as a whole. However, while the economy has demonstrated impressive reduction in
unemployment, in urban areas unemployment figures remain high. Youth unemployment is a
problem which is affecting most countries. The ability of young age in productive activities has
both social and economic consequences for an economy (Nyzinga Brousard, Thegay Gebrekidan
Tekle Sillassie, 21 April, 2013).

Nekemte town is the rapidly growing town in Ethiopia. It is found in Oromia region, East
Wollega Zone by having a distance of 328 Kilo meters from Finfinne, capital city of Ethiopia. In
this town, youth unemployment is very serious problem. Among the total population of 120126
of this town, 62466 are youth population. Out of this total youth population of the town, 5686 are
youths who are unemployed (CSA of Nekemte town, 2016).

1.2 Statement of the Problem

Now days, plenty of problems have been seen in our world. Among these problems, population
growth and unemployment is the most serious problems. These problems are increasing over the
highest rate relative to economic growth and development. Population growth is the known
factor which fires unemployment specifically, youth unemployment. World Youth
unemployment is high i.e. three times higher than adult employment rate (ILO, 2010).

In Sub- Sahara Africa, youth people aged (15-24) accounts for more than 52% of working age
population. Due to population pressure, the number of youth people looking for work is expected
to increase by 28% in the next 15 years (UN, 2010).

2
Being late or failure to address youth unemployment problem will have serious consequences on
the economy of a nation and a society. Without giving opportunity to earn living, intergeneration
cycle of poverty will persist further affecting already made vulnerable by HIV/AIDS, food
security and violence (Gaurcelo Rosart, 2009).

High level of unemployment and underemployment are among critical socio-economic

problems, even hurting the political condition of Ethiopia. While the labor force grows with an
increasing proportion with employment growth, the market is inadequate to absorb the labor
market entrants. As a result, youth are likely to be employed in job of low quality,
underemployed, working for long hours for low wage, engaged in dangerous work or receive
short term and/or informal employment arrangements (Birhanu Deni, 2008).

Similarly, in Nekemte town, the problem of youth unemployment has been poisonous problem.
No one has been conducted the research to solve this problem in the town. Hence, we intended to
solve the problem in order to mitigate the problem of youth unemployment of the town.

The Study would address the following questions:

• What are the impacts of population growth, experience and skill on youth unemployment
in Nekemte town?
• What are the political, economic and social factors that lead youth unemployment in
Nekemte town?

1.3. Objectives of the Study

1.3.1. General Objective

The general objective of this study would be to examine the determinants of youth
unemployment in Nekemte town.

1.3.2 Specific Objectives

• To analyze the impact of population growth, experience and skill on youth
unemployment in Nekemte town.

• To identify political, social and economic factors that leads to youth unemployment in
Nekemte town.

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1.4. Significance of the Study
The importance of the study is to provide information about determinants of youth
unemployment in Nekemte town to other researcher and policy makers of this town. It also
provides information about youth unemployment to the residents of the town. This study also
highlighted the behavior of youth unemployment in Nekemte town.

1.5. Scope and Limitation of The Study

1.5.1. Scope of the Study
The study is conducted in Nekemte town. It focused on determinants of youth unemployment in
Nekemte town due to the fact that unemployment of youth is more serious.

1.5.2. Limitation of the Study

The fault of this study is inapplicability to other areas of the zone due to its attention on only
Nekemte town. The data collected shows only about youth unemployment in Nekemte town and
it will not represent that of other areas.

1.6. Organization of the Study

The research paper is organized in to five principle chapters. The first chapter includes
introduction, background of the study, statement of the problem, scope and limitation of the
study and organization of the study itself. The second chapter includes review of literature i.e.
theoretical and empirical review. Chapter three is about methodology of the study which
includes descriptions of the study area, data types and sources, sampling design and data
collection method, classification and analysis. Chapter four focuses on data analysis and
discussion. The final chapter is focused on conclusion and recommendation.

CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1. The Theoretical Literature Review

4
 2.1.1. Definition of basic terms
The term unemployment was defined in many different ways by different economists.
Unemployment is a job situation in which people who are qualified for a job, willing to work and
willing to accept the ongoing wage rate, but could not find jobs without considerable delay of
time (Mankiw, 2006).

Unemployment is a macroeconomic problem that affects people most directly and severally. For
most people, loss of a jobs means reduced living standard and psychological disasters; A person
said to be unemployed if he is currently available for employment and has actively looked for job
with impost of four weeks. If unemployed workers has unable to find a job for so long that he
finally gives up hopes to get one job and he drops out of work force and is now without looking
for job, such person is called “discourage workers”. If sometimes later new opportunity comes
out, he may be stimulated again and try his chances there by re-entering the labor force (Broman
and Jalo,1970 as stated by Gizachew, 2012).

Unemployment is the condition of being without some socially accepted means of earning a
living and employed are persons in need to work on the suitability of what they can do to the
needs of society (John A.Gassty, 1978, cited by Andualem Esthete, 2012).

2.1.2. Types of Unemployment

There are four types of unemployment. These are
A. Frictional Unemployment
B. Structural Unemployment
C. Cyclical Unemployment (deficit demand) and
D. Seasonal Unemployment

A. Frictional Unemployment
This type of unemployment is unemployment which occurs from the inevitable time delays in
finding new employment in a free market. It may also called ‘Search unemployment’ as it relates
to the time taken to search for new employment (Tejvan petting, November 28, 2012).

B. Structural unemployment

5
With structural unemployment, job vacancies and unemployed workers coexist in the market and
in long run, are not easily matched. Unlike frictional unemployment, it tend to be constructed
among certain groups that had been adversely differed by technological changes, decline of
major industry, or the movement of jobs to another parts of a country ( Kaufman and
Hotchkiss,2008).

C. Cyclical Unemployment

Cyclical unemployment is a type of unemployment which is caused by economic recession and

is talked about frequently. It is the result of insufficient aggregate demand in the economy to
generate enough jobs for those who seek it. Cyclical unemployment is closely related to
movement of economy ups and down of the business cycle. Public policy might reduce the
extent of cyclical unemployment in several ways (Ibid, 2006).

D. Seasonal Unemployment

Seasonal unemployment is a situation when a person is unemployed because; certain jobs are
available at certain times of the year. For instance, demand for production of workers fall in
certain industries during the season of the year when plants are retooling to bundle annual model
changes ( Tejvan Petting, Nov.28,2012).

2.1.3. Youth Unemployment

Youth unemployment is one of the challenges that are facing the world today. Youth
unemployment is unemployment of young people who are between 14-28 years old (UN, 2010).

In developing countries, youth face not only challenges of obtaining production employment, but
also obtaining safe and acceptable work (Yzingo Brassard, Tsegay Gebrekidan Teklesillasie,
2013).
Youth unemployment is spread of unemployment among young people (O’Higgins, 2002). A
number of individual characteristics and to increase or reduce the likely hood that youth person
becomes unemployed, few of these are presented here:

Teenagers versus youth- Adult: The general picture that emerges is that unemployment rate tends
to fall with age, which is true for the majority of countries.

6
Women versus Men: cerebrally speaking, female labor participation rates are far lower than that
of youth man, particularly, in developing countries. The most usual labor force for youth men are
education, leading, working in office and etc. But the principal occupation of women youth are
activities mostly related to house. Female participation rate in education is much lower than that
of male.

Ethnic origin: In most countries, there are different employment figure according to ethnic
origin. Some ethnic groups have better opportunity than the others.

Youth people with disability: A number of studies have noted that an abled youth are considered
to be more important economic agents than disabled young. Even, disabled persons are assumed
as mentally disabled and have no role in economic performances of a country.

Regional disparities: regional variation in youth unemployment rate is correlated with regional
variation in adult unemployment rate.

2.1.4. Characteristics of Youth Unemployment

Higgins (2005) found that youth unemployment has the following features.

Youth unemployment is higher than adult unemployment rate. The most labor market
characteristics of youth unemployment are higher than adults though there are few exceptions in
some developed countries.

Youth unemployment and labor force participation, O’Higgins (2005) underline that rate of
participation will influence the level of youth unemployment through its influence of the size of
labor force participation which imply a higher unemployment, other things being equal.

2.1.5. Causes of Youth Unemployment

There are multiple and complex cause behind youth unemployment. Among them, quality and
relevance of education, inflexible labor market and regulations, which in turn create a situation
of assistance and dependency, are the main causes which are discussed as follows (Impact
Journal, 2016).

Quality and relevance of education- This is considered as the most common cause of youth
unemployment. In 2010, 25 out of 27 developing countries, the highest employment rate was
among youth with primary education or less unemployment rate is among university graduates.

7
Even, since university graduate students have no adequate skill, they are not absorbed by labor
market. This in turn lad to two phenomena first inability for youth people to find job and in
ability for employer to hire the skilled person they need survey suggest that up to half of all
business they have open position for which they are struggling to find suitable qualified people
for many government a key question is how they can bring this gap that the labor force are
equipped with the skill employer are looking for.

Youth wage; Wage is more likely to have negative impact on youth unemployment as much as
the relative wage of youth workers with respect to those adults.

Assistance and dependency; Many countries around world provide income assistance to support
unemployed youth until labor market and economic condition improve. It has led to an emerging
debate about whether or not it creates dependency among the youth and has a detrimental effect
on them. For instance, in September 2014, David Cameroon announce that he would cut housing
employment benefit for 18-21 years old by £3,000 to £23,000 to reduce dependency on
government assistance and redirect funding to targeted programs for increased learning and
training opportunities.

Size of youth labor force; recently, much concern has been given about the negative consequence
of rapidly growing of youth population in developing countries. The growth rate may even is
accelerating in Africa.

2.1.6 .Consequences Of Youth Unemployment

Economic consequence; there is no any positive aspect of unemployment on economic
development of country. The economy become less when working youth are throwing away and
during the period of high unemployment means the goods and service that would be produced
by these youth become less (1L0, 2006).

Social consequences; youth unemployment is a major social problem, because it causes

enormous suffering on social condition of a country. Unemployment has a direct relationship
with many social problems or anti-social activities such as poverty increment, being robber,
violence, and physiological damage. If people do not have as much disposable income as before,
it is very likely that crime level within the society will be increased. Youth unemployment has a
negative effect not only on the future ability of young people, but also on their self-esteem and

8
role in a society. It can represent a serious economic burden on state finances, waste of human
resources and in most cases active and skillful workers wasted during long period of
unemployment. Also unemployed youths can loss their skill causing demoralization and
hopelessness and hence, loss of human capital, the cost of society could be enormous (Todaro
M.and Smith, 2006).

Political consequence: unemployed youth become careless in decision making scenario of the
country and inactive in thinking for the wellbeing of his society (Impact Journal, 2016).

2.2. Empirical Literature Reviews

Youth unemployment is increasing at alarming rate in developing countries particularly in sub
Saharan countries. Sub-Sahara is the only where adult and youth labor force is growing at 30%
and youth unemployment rate is growing at 21% (ILO, 2008).

2.2.1. Empirical Literature Reviews

From 1997 to 2007 worldwide youth participation rate decreases while youth inactivity rate (non
–participation in labor force) increased (55.2% to 50.5% and 45.7% to 48.8%), respectively
(ILO, 2009).

Youth are the most susceptible to issue such as long work hours, work with short term or in
formal sector contract low pay and little or no social protection (Mc Connelle, 2005).

2.2.2. Youth unemployment in developing countries

According to ILO (2008) report, unemployment problem in Africa particularly of youth is a
serious problem .Sub Saharan population was estimated to be at 138 million in 2002. Among
these, 28.9 million (21%) them are unemployed.

Sub Saharan Africa’s youth labor force would be even more difficult to accommodate in the
future. In fact, the ratio of youth 3.6 in 1993 and remained virtually unchanged at 3.5 in 2003
(ILO, 2006).

The study by Kingdom and Knight (2003) find out that unemployment in Africa is highly caused
by the defective education system. The education system in Africa do not corresponds directly to
economic realities prevailing outside the school system. Africa’s educational policy merely

9
produces individual whose services do not reflect the economic trends on job market and
education structure specially, the skills of graduates are not transferable.

Unemployment in 3rd world describe that the combination of population growth associated with
high fertility rate and the slow increase of job creation in Africa presents challenges to its youth
(Josephus, 2010). Stephen and woo lard (2008) studied unemployment of youth and household
for nation in Africa. According to their study, the major cause of unemployment in Africa can
also associated with negligence of the leaders and their compute attitude, they down the culture
of power retention and money embezzlement , the fund needed for the development of the sector
would be diverted to personal use, with trends, there is no way forwarded and we remain
undeveloped .

2.2.3. Ethiopian experiences

The study by Asnake (2014), investigated that education system as failed to produce with
sufficient skills and there is lack of demand for these enrolling out of school, in case the problem
of youth unemployment is much higher for the literate than for an illiterate group by using data
who completed secondary education and all level of education i.e. TEVT (10+1, 10+2, 10+3)
and also preparatory. Female unemployment rate is higher than male due to lack of competence
of women.

According to the study of Abay (2013), urban labor market in Ethiopia is dominated by the
public sector which employs roughly one third of adult men, the formal private sector employs
less than 10% a direct consequences of the policies of the past regimes which ensures that most
medium and large scale enterprise where under government control. Private firms were explicitly
restricted in size and where not allowed in all sector. These results obtain from secondary data by
analyzing using economic model.

CHAPTER THREE

3. METHODOLOGY OF THE STUDY

3.1. Description of the Study Area
This study is conducted In East Wollega Zone, in Nekemte town. This town is bordered by Wayu
Tuka Woreda from East, Diga Woreda from west, Guto Gida form north and Leka Dulacha
10
Woreda from south. The relative distance of the town is 328 kms from capital city of Ethiopia,
Addis Ababa.

The astronomical location of Nekemte town is 9 0 46’N and 360 31’E while its elevation is 2088m
above sea level. The sea level and mean annual rainfall of the town ranges from 1600mm to
2300mm. The climatic condition is subtropical. The town nearly stretches over 3192 hectors,
mainly along Addis Ababa to Asosa high way (Nekemte Municipal City Office, 2016).

Nekemte town has six urban kebeles. The town has estimated population of 120,126 of whom
61304 are men and 58822 are women. From estimated total population, working age groups (15-
64) are estimated to be 80685 of whom 37628 are males and 43057 are females (CSA, 2016).

Nekemte town has different infrastructures, like health and education, both by government and
private. Road, water and electricity are there though sometimes there may be with some
difficulties. In addition to some of difficulties, there is a problem of unemployment, specially,
youth unemployment in this town. From total Youth population (62466), of the town, 15340 are
unemployed (Documents of Nekemte Municipal City Office, 2016, and Nekemte Youth and
Sport Office, 2016).

3.2 Methodology of The Study

3.2.1 Data types and sources
The types of data that were used in the study are classified into two. The first was primary
source, and the second was from secondary source. This data was collected from youth
inhabitants of Nekemte town who were unemployed through structured questionnaire and
interviews. The secondary data was collected from both published and unpublished documents
from all concerned bodies of Nekemte town. The data collected from these primary sources was
used for descriptive analysis.

3.2.2. Method of data collection

For this study, the primary data was collected through interviewing and questioning sampled
respondents. Because, information was collected from literate and illiterate respondents. But
secondary data was collected from both published and unpublished documents.

11
3.2.3. Sampling techniques
The sampling technique employed was multistage sampling technique. At first, Nekemte town
was selected from all East Wollega Zone purposively. In the second stage, from six kebeles of
Nekemte town, two kebeles, Chalalaki and Darge were selected purposively, because the
intensity of youth unemployment was almost similar in all kebeles and so that we selected these
kebeles since we were more accessible to necessary data. Thus, these kebeles were representative
to the others. In the third stage, from the two kebeles, samples of respondents were selected by
using simple random sampling technique, in proportion to the total youth unemployment.

3.2.4. Sample size

In 2016, Nekemte youth population was 62466. Among these, unemployed were 15340. These
number was composed of male (8560), and female (6780). Out of this, 2605 were found in
Chalaki and 2680 were found in Darge (Documents of Nekemte Municipal city, 2016)

The samples of youth respondents were decided by using Yamane (1967). Sample size is
calculated by taking 95% confidence interval, 0.5 degree of variability and 9% degree of
precession.

N
n=
1+ N (e)2

Where, n=sample size

e =level of precession which is equal to 9%

N=number of unemployed youth from selected kebele.

From the selected kebeles, i.e. Chalaki and Darge 5285 are youth unemployed in 2020.

5285 5285 5285

n= = = =121 n=121
1+5285 ( 0.09 ) 2 1+ 42.8 43.8

The number of respondents in each kebele is calculated as follows.

n(¿)
¿=
N

12
 Where, Ni=total number of unemployed youth in kth kebele.

N=total number of unemployed youth in selected kebele.

= sample size of ith kebele

n = total number of sample size that were used.

Table 3.1 Summary of sample size determination in selected Kebeles

Kebele Number of unemployed Number of unemployed youth

youth
Chalaleki 2605

121 ( 2605 )
5285
= 60

Darge 2680

121 ( 2680 )
5285
= 61

Total 5285 121

3.2.5 Method of data analysis

In this study descriptive method of data analysis was employed. In this descriptive analysis,
tables, frequency and percentages were used to describe the given data.

13
 CHAPTER FOUR

4. DATA ANALYSIS AND DISCUSSION

In this chapter, the result of the study was displayed and detailed analysis of the study was
presented. As it has been aforementioned in the methodology part, 121 respondents were
selected as representatives of target population. Hence the data obtained are analyzed in good
manner in this indispensable chapter.

4.1. Descriptive analysis of data

Based on cross sectional data collected from Nekemte town, the result of descriptive analysis is
reported. The survey data were used to describe demographic, economic, social and politico-
institutional characteristics of the sampled respondents.

4.1.1 Demographic characteristics of respondents

4.1.1.1 Sex composition of respondents.

Sex are the major factor that determine the rate of youth unemployment

Table 4.1 sex composition

Sex of respondents Frequency Percent
Male 48 39.67%
Female 73 60.33%
Total 121 100%
Source: own survey, 2020

From the above Table 4.1 we observe that out of total respondents, 39.67% were male youth who
were unemployed while 60.33% were female youth who were unemployed.

This implies that town’s female youth unemployment was higher than male youth of the town.
As depicted from the result on Table 4.1 above, majorities of sampled respondents were male i.e.
39.67% while 60.33% were female youth who were unemployed. It also indicated that there was
gender gap among male and female in rate of youth unemployment.

14
4.1.1.2 Age composition of respondents

Table 4.2 Age composition.

Age of respondents Frequency Percent
15-17 48 39.67%
18-20 40 33.10%
21-24 33 27.23%
Total 121 100%
Source: own survey, 2020

From above Table 4.2 concerning age structure, 39.67% of respondents were aged 15-17,
33.10% were aged 18-20, and 27.23% were aged 21-24. This age composition implied that age
interval 15-17 dominate the sample proportion of this study i.e. majority of sample respondents
who were unemployed youth. From this study, we concluded that as the age of youth increases,
unemployment rate diminishes. Because, as youths become older and older, their ability of
getting job increases.

4.1.1.3 Marital status of respondents

Table 4.3 marital statuses of respondents.

Marital status Frequency Percent
Single 106 87.60%
Married 13 10.748%
Divorced 2 1.652%
Widowed 0 O%
Total 121 100%
Source: own survey, 2020

Concerning marital status as depicted on the above Table 4.3, among the total respondents,
87.60% were single, 10.748% were married, 1.652% was divorced and 0% was widowed. Also,
these figures showed that majority of respondents were single. This marital status has great
impact on youth unemployment because job searching capacity of married and unmarried are not
equal.

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4.1.1.4 Educational status of respondents

Table 4.4 Educational levels of respondents

Educational level Frequency Percentage of youth
unemployment
Illiterate 22 18.181%
1stcycle 24 19.834%
2nd cycle 16 13.223%
High school 30 24.793%
Preparatory school (11-12) 4 3.309%
TEVT 9 7.438%
Diploma 1 0.826%
University first degree 15 12.396%
Total 121 100%
Source: own survey, 2020

The survey on above Table 4.4 indicated that youth unemployment rate is much higher for
literate than illiterate. These means 18.181% of total youth unemployed were illiterate while the
much rest i.e. 81.819% were literate youths who were unemployed. Among literate unemployed
youths, highest rate of unemployment rate i e. 24.793% was found in youths who had high
school education level. These include those who failed national examination and dropped out.
These students were not solely from Nekemte town, but also from the surrounding areas.

Illiterate, first cycle and second cycle accounts 18.181%, 19.834% and 13.223% respectively.
Unemployed youths at these levels of education missed job opportunities due to lack of required
educational level to join that jobs. Also, unemployed youth whose level of educations were in
preparatory level, TEVT and university 1 1st degree accounted 3.309% , 7.438% and 12.396%
while diploma level accounted 0.826% of total unemployed youths.

16
4.1.1.5 Original residence of respondents

Table 4.5 Original residence of respondents

Where were original place? Frequency Percent
Rural 84 69.421%
Urban 37 30.579%
Total 121 100%
Source: own survey, 2020

As inferred from table 4.5 above, most of unemployed youth were come from rural area. This
reminded us that rural-urban migration is the major determinants of youth unemployment. In fact
from above table 4.5, 69.421% of youth unemployed were those who came from rural areas. The
lower amounts i.e. 30.579% were unemployed youths who were from urban areas.

4.2 Impacts of population growth on youth unemployment

Table 4.6 Impact of population growth on youth unemployment
Do you lost job due to high population Frequency Percentage
growth
Yes 83 68.60%
No 38 31.40%
Total 121 100%
Source; own survey, 2020

As indicated on table 4.6 above there was high correlation and positive relationship between high
rate of population growth and youth unemployment. It mean that larger percentage of youth
unemployed (68.6%) were due to high rate of population produces many youth and due to this
reason the labor market could not absorb the whole youths.

17
4.2.2 Work experience and skill of respondents

Table 4.7 work experience and skill of respondents

Organization Frequency Percent
Government 2 1.653%
Non-government 5 4.133%
Private 3 2.479%
Self employed 0 0%
Unskilled and inexperienced 111 91.735%
Total 121 100%
Source: own survey, 2020

As indicated on Table 4.7 above only 8.265% which were 1.653% from government, 4.133%
from non-government, 2.479% from private and none from self-employed achieved experience
and skill which would enabled them to find new job and to start his own business. This implied
that as work experience increases, unemployment rate decreases. Many respondents (91.735%)
were unskilled and inexperienced.

4.2.3 Reason for unemployment of youth respondents

Table 4.8 Reason for unemployment of youth respondents

What was the reason for your being unemployed? Frequency Percent
Lack of required education 34 28.099%
Lack of training 17 14.049%
Lack of capital 48 39.669%
Lack of sufficient job market 22 18.183%
Total 121 100%
Source: own survey, 2020

According to the Table 4.8 above, lack of capital took the great role for youth unemployment.
That means, the largest share i.e. 39.669% of total youth unemployment was lack of capital to
begin their own business. Lack of required education was taken the second part for
unemployment of youths. Also from above Table 4.8, it was indicated that lack of training and
lack of job market affect employment opportunity of respondents i.e. 14.049% and 18.183% of
youth respectively were unemployed due to these factors.

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4.2.4 Non-economic characteristics of respondents

Table 4.9 Non-economic characteristics of respondents

Which non-economic problems you faced Frequency Percent
Cultural tradition 28 23.140%
Sex or gender difference 36 29.752%
Difference in social status 20 16.529%
Difference in parent education 17 14.05%
Family size difference 20 16.529%
Total 121 100%
Source: own survey, 2020

Observed from table 4.9 above 23.14% of total youth unemployed faced problem of cultural
tradition in finding job. The greatest average which was 29.752% unemployed youth faced the
problem which related with sex or gender difference in searching for job. The same average,
16.529% of total unemployed youth faced the problem which connected with difference in social
status and family size difference respectively. Also the least of all which was 14.05% was the
problem which unemployed youths faced in the field of job seeking

4.2.5 System of administration characteristics of respondents.

Table 4.10 Administration system of respondents

Did you lose the job because of corruption? Frequency Percentage
Yes 83 68.595%
No 38 31.405%
Total 121 100%
Source: own survey, 2020

It is inferred from table 4.10 above that there were high correlation between corruption and youth
unemployment. It indicated also that out of total unemployed youths, 68.595% youths lost job
due to prevalence of corruption in government office. Only smaller amount which was 31.405%
youth was responded that they did not lost job due to corruption.

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 CHAPTER FIVE

CONCLUSION AND RECOMNENDETION

5.1 Conclusion
The aim of the study was to identify determinants of youth unemployment in Nekemte town. To
the study, political, economic and institutional were included and analyzed. Primary data was
collected from two kebeles and secondary data was collected from different documents
concerning the studied area.

For data analysis, descriptive statistics was used. The descriptive result show demographic,
socio-economic, political and institutional characteristics of respondents by using percentage and
frequency distribution.

From analyzed data, the problem of youth unemployment was unevenly distributed between
male and female. Youth unemployment is higher from which was 60.33%. This was due to back
ward attitude toward female which discriminate female from actively searching work and
restricting women to home work. There was great difference within the structure regarding youth
unemployment level. The highest youth unemployment was found in age structure 15-17 years.
This was due to the positive relationship between job seeking ability and age of youths. Also,
most unemployed youth had single marital status. This showed that since they had no constant
income which would enable them to survive, they were not married.

Educational level was the major determinant for youth unemployment. Unemployment was
higher for illiterate than for literate. The reason was that they did not have required education for
performing jobs. Both high school and university 1st degree youths had highest unemployment
level. This was due to the fact that high school level was dominated with those youth who were
dropped out and failed the national exam. Also, the first degree graduated youths were
unemployed because of mismatching of their field and market. Also, migration was the known
determinant of youth unemployment in the town. The higher percent 69.421% of unemployed
youths was occupied by those who came from rural areas. This was due to the fact that since the
living condition in rural was too difficult they migrated to the urban to find the better living
condition. Work experience and skill were also important factors which determined the

20
unemployment level of respondents. 91.735% of youths where unemployed due to the fact they
had no required experience and skill for available jobs.

Lack of capital and required educational level were also the factors which greatly caused
unemployment of youths in Nekemte town. The reason behind were Evan though government
credit and lending was available for the towns youths, youths were asked to pay soma percentage
of money in advance. Since youths had nothing to pay, the enforced to lost the capital. Sex and
gender difference and cultural tradition were also the major determinants of youth
unemployment of the town. 29.752% youths were unemployed due to discrimination on sex and
gender difference to job certain job. Cultural tradition also became a bottle neck to join job. This
was due to many jobs focused on finding only government jobs by giving low status for other
jobs. This was due to lack of awareness on equity of all available jobs. Corruption within the
town also played a great role for youth unemployment. 63% of youths were unemployed because
of high corruption level existed in different government offices.

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 5.2 Recommendation
Based on finding of the study, the following recommendations are forwarded.

• Youth unemployment are highly dependent on age, educational level, high skill and
experience population growth, migration, capital, gender and sex difference, cultural and
corruption.

• Youth unemployment is high for youth aged 15-17. This is due to the fact that many job
markets do not want to employ those youths. Hence, government and concerning bodies
should create enough market such as expanding manufacturing industries for absorbing
them.

• Youth unemployment level varies depending up on educational level of youth. 18.181%

are unemployed youth who were illiterate. These are due to inability to write and read.
19.834% are youth with educational level of first cycle. This is due to adaptation of being
dependent on their family and not giving higher place for job. 24.793% youth are youth
with high school educational level. Those youth were unemployed because of high
interest of higher education rather than joining job. Also, 12.93% youth have been
unemployed due to the fact that there are no enough demand for their field of study.
Hence in order to reduce youth unemployment in the town, concerned bodies should
expand educational opportunity, educate youth and should create effective market
demand by diversifying economy which can absorb those educated youth.

• High population growth has great impact on youth unemployment. It indicates that high
population growth decrease job opportunity and hence, exacerbates the problem. So, the
concerned body should control population growth by expanding family planning program
in both rural and urban areas.

• Migration greatly affects job opportunity of youth. It shows that the migrated youth
become burden for the town as it creates over population and narrowing job opportunity
within the town. Hence, government and other bodies should control migration by
creating attractive environment and vast job opportunity by expanding an agro based
industries in rural areas.

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• Skill and experience have huge impact on youth unemployment. This implies that as skill
and experience of youths improved, unemployment will be reduced. Therefore, all
concerned bodies should promote technical and self-employment education by
restructuring of education programs and focusing more on practical education.

• Lack of capital greatly exacerbates youth unemployment. It means that youth who have
enough capital start their own business rather than being unemployed. Hence,
government should provide loan without demanding initial capital deposit.

• Cultural tradition has detrimental effect on youth unemployment. This indicates that
according to cultural traditional, one job is superior over the others. To reduce youth
unemployment the concerning body should raise awareness of youths that all jobs are
equal if properly handled.

• Corruption is the known enemies for youth employment. Because, if there is corruption
productive youth would be disfavored and as a result they become excluded from
contributing to development of their country. This implies that where there is corruption
there is high level of unemployment. To minimize level of youth unemployment,
government and concerning bodies should control corruption and treat all people equally
by enhancing good governance within the town.

23
 REFERENCES
• Abay (2014), Determinants of youth unemployment in Jima town.

• Asnake (2013), Determinants of youth unemployment in Bule Hora town

• Broman and Jalo(1970),stated by Gizachew(2012), factors responsible for

unemployment in poor countries
• CSA (2007), Urban employment survey, Addis Abeba, Ethiopia.
• CSA (2016), National Population census, Addis Abeba, Ethiopia.
• Eurostat, plannedarticle (2016), Youth Unemployment Situation In EU
• Gaulio Rozart (2009), Characteristics and outcome of youth unemployment in under
developing nations
• Ibid (2006), unemployment mitigation measure through application of appropriate policy
• ILO (2003), Active labor market policies in support of Ethiopian sustainable
development and poverty reduction program
• ILO (2004), Ethiopian employment mission report, Addis Abeba, Ethiopia
• ILO (2006), Policies of labor market in under developing countries to promote
unemployment
• ILO (2008), Developing report to enhance employment in African countries
• ILO (2009), World employment and unemployment report, Geneva
• ILO(2010), Status, cause and consequences of unemployment in African countries
• Impact Journal (20016), Factors behind youth unemployment in sub-Saharan Africa
• Kaufman and Hotech Kiss (2008), The economics of labor market, seventh edition, New
York
• Mankiw (2006), Macroeconomics, 5th edition, Newyork
• Nekemte Micro Enterprise, and Youth and Sport Office (2016), Published documents for
the Youth of Nekemte town
• Nekemte Municipal City (2016), Levels of youth employment and unemployment in
Nekemte town
• Nyzing Brausard, Tsegay Gebrekiden Tekle Sillassie (2013),
Characteristics of youth unemployment in Ethiopia
• O’Higgins N.(2005), The challenge of youth unemployment and employment, and
training department, International, Geneva

24
• Tejvan Petting (2012), forms and characteristics of unemployment in developing
countries
• Todaro M. and Smith (2006), Economic development, 9th edition
• UN (2010), Sub-saharan Africa and employment level associated with population growth
• UN (2012/13 Unemployment and policies of job creation for under developing countries

25
 APPENDIX
NEW GENERATION UNIVERSITY COLLEGE
COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

QUESTIONNAIRE

Dear respondents, this questionnaire is prepared by economics undergraduate students for

conducting research on determinants of youth unemployment in Nekemte town for partial
fulfillment of Bachelor of Art (BA) degree. You are kindly requested to provide the necessary
information carefully and precisely for the questions listed below. The objective of the
questionnaire is to gather relevant information regarding objectives of the research to outline
determinants of youth unemployment and suggest the way that help to increase employment on
study area.

Instructions;

Encircle the choice part and write your opinion on space provided clearly and precisely.

Choosing more than one answer is allowed.

Be sure that you should give only your own answer.

THANK YOU IN ADVANCE!!

• Demographic characteristics of respondents

1. Sex: Male Female

2. Age_______

3. Educational Level: A) never studied

B) Elementary school

C) Secondary school

D) Certificate

26
 E) Diploma

F) Degree

G) Second degree and above

4. Marital status:

Married

Single
Widowed separate

Other specify -----------------------------------------------------------------------------------

5. Is Nekemte town your birth place?

A) YES B) NO

6. In question number 6 if your answer is “NO” from where do you come

A) Rural area B) Urban area

B. Employment or unemployment situation and source of income

1. Have you been employed before?

A) Yes B) No

2. If your answer yes from which type of organization?

A) Government B) Non-government C) private

D) self-employee

3. What is the cause of your unemployment?

A. lack of education B) lack of training C) lack of capital

D) Lack of efficient job the market E) lack of network

27
F) If any other specify

4. Why you have been unsuccessful finding a job?

A) There is no enough jobs

B) There are jobs, but do not have any information

C) You don’t have experience

D) You have living too far

5. Which non-economic factor highly contributes of the expansion of youth unemployment
specific area?
A) Cultural tradition

B) Sex or gender difference

C) Difference in social status

D) Difference parent education

E) Family size difference

6. What do you think about the remedial measure to reduce youth unemployment from specified
town?
A) Increase capital information

B) Provide incentive of private sector

C) Control population growth

D) Formulated proper monetary and physical policy

E) Create awareness for all people about equality of job irrespectiveness of the payment

7. Do you think that high population growth of the town can affect Youth's job opportunity?

A. Yes B. No

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