Abstract:
Coupled with population growth and increased poverty, unemployment has a significant impact
on growth and development of the economy at larg. Therefore this study was conducted to
identify the major determinants of urban employment creation and its impact on household’s
welfare in Ambo town, Oromia Regional State, Ethiopia. The study employed discriptive, and
correlation research design with qualitative, and quantitative research approach. The required
data, the primary data, were collected through questionnaire, interview and focus group
discussion. Stratified sampling technique was followed to collect data from 156 selected
household heads. The collected data were analyzed using both descriptive and econometrics
analysis. Descriptive statistics such as frequency, mean, Chi-square, t-test, were used.
Furthermore, binary logistic regression and multiple linear regression analysis were used with
the help of Stata software version 21. The findings of the study showed that the female household
heads were less employed than male household heads. Lower aged household heads were more
vulnerable to unemployment than older age household heads. Unemployment has impact on
households’ welfare. Households consumption expenditures and living standards were
minimized due to household heads unemployment. This is due to the fact that unemployed
respondents had less access to credit than employed respondents. Their options of covering
income shortages are partition their own classes and rent to others to cope with unemployment.
The other alternative to smooth their consumption was getting help from family members. This
means, one or two family members out of the household head, may have a job and they tried to
fill the entire family consumption gap as a solution to household heads unemployment.
Therefore, the study recommends that Ambo town Administration should facilitate on time credit
utilization for the household heads in the study area. Similarly, Ambo town Administration
Urban Food Security and Job Opportunity Creation Office should prepare some sort of social
safety net for the unemployed and their family members that may be an important short-run
solution to relieve the negative pressures on household consumption. In the long-run, the
government should encourage the private sector and attracting investment with high employment creation
capacity through joint venture with those requiring huge investment highly labor intensive, such as
the manufacturing and tourism sector
