The Role of Informal Sector Employment in Poverty Alleviation: The Case of Hawassa City, Ethiopia

Course ID
Ethiopian Economics Association (EEA)
Tefera Darge


Informal sector plays an important role in urban poverty alleviation through creating jobs and reducing unemployment. It serves as a breeding ground for new entrepreneurs, and contributes for the reduction of urban crime and violence. This study is aimed at assessing the role of informal sector in solving unemployment and alleviating poverty. Primary data are gathered from a sample of 450 informal sector operators in Hawassa city. Ordinary logistic regression is used to determine the factors that can contribute to the livelihood improvement of the operators. Consequently, lack of working capital, working premises, adequate market, and raw materials are found to be the major impediments for informal sector operators. Nearly, nine out of ten operators have witnessed that their livelihood improved after they joined the sectors. Those operators who are more educated, younger, females, more profitable, stayed longer in the activity, natives to the city, and have a culture of saving, have depicted better livelihood improvement vis-a-vis their counterparts. Given the immense contribution that the sector has, therefore, the government needs to consider the sector as one of the fundamental pillar to combat poverty reduction. Thus, the operators should be encouraged to join the formal sector by lessening the bureaucracy to get license, minimizing entry cost such as lowering registration or licensing cost, and providing tax-holidays for sometimes

Corporate Author: Worku Gebeyehu & Demirew Getachew (Editors). ; Ethiopian Economic Association. Awassa Chapter
Publisher: Ethiopia Economics Association (EEA)
ISBN/ISSN: 978-99944-54-28-10
Primary Descriptors:

Informal sector

Secondary Descriptor:

formal sector, livelihood

Geographic Descriptors: Ethiopia, Hawassa
Cataloge Date: 02/27/2013
Broad Subject heading: poverty
Call Number: 330.963 PRO 2012
Serial Key Title: Proceedings of the Second Regional Conference of the SNNPRs Economic Development
Publication catagory: Regional Conference
Content type: EEA Publication
Publication date: 2013-08-27 00:00:00
Forum or Discussion date: 2013-02-27 00:00:00
Edition: 2nd
Conference Place: Hawassa, Ethiopia
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Thematic area: Regional Conference of the SNNPRs Economic Development
Author: Tefera Darge
Chapter conference: SNNPR
Conference date: 2009

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