ABSTRACT

Ethiopia was ranked 174th out of 189 countries in terms of human development and poverty indices, with a multidimensional poverty index of 0.537, making it the second poorest country in the world. The effects of poverty become even more serious, especially where there is high rate of urban unemployment and lack of income resulting from recent economic reforms. A national employment policy was put in place in 2009 to provide a framework to guide interventions aimed at improving employment and poverty outcomes. There are various measures of poverty, but authors use the widely accepted Foster, Greer, and Thorbecke poverty indices to measure urban poverty in Ethiopia. Most of the empirical studies on poverty in Ethiopia solely focus on the relationship between household welfare and demographic characteristics of the household such as age, gender, household composition and size. Sex of the household head is coded as two dummies, with female as the reference category.