Policy brief - Unemployment and self-employment in urban Ethiopia Determinants and scenarios

The model endogenously generates predictions for the importance of different labour market states, like unemployment and own- account work, as a function of fundamental characteristics of the economy. [...] What are the aggregate, distributional and welfare effects of income support to the unemployed? Policy brief 32416 | January 2020 International Growth Centre 2 The analysis allows for conclusions on the relative importance of different frictions, for different outcomes, like unemployed and self-employment, and thereby helps guide thinking into which areas are promising targets for further investig. [...] It helps to both guide attention – which obstacles are important and should be the object of further study and possible policy intervention? – and to develop an understanding of the possible quantitative effects of policies, both for the targeted outcome and in other dimensions. [...] For unemployment and self-employment, policies that have been considered include income support to the unemployed, the (de)regulation of business entry, and efforts to improve the matching of job searchers and firms. [...] Due to the high level of unemployment, it is a costly policy and in practice, collecting the taxes required to finance the program may be a challenge.