National Aviation College

Department of International Trade and Economics

Proposal on
The effect of Information and Communication Technology
on labor productivity and working Poverty: in the case of
Addis Ababa City administration
By:
Solomon Bekele
Registration No: GIER/043/14
Advisor: Abebe Derbie (Ph.D.)

A Thesis Proposal Submitted to National Aviation College

In Partial Fulfillment of the Requirements for the Degree of
Master’s Degree in International Trade and Economics (MSC)
Addis Ababa, Ethiopia
June 2023
Acknowledgment
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List of Abbreviations

ICT – Information Communication Technology

UNESCO –
ITU– International Telecommunication Union
AI – Artificial Intelligence
WEF– World Economic Forum,
IoT
5G
GSMA –
INSA – Information Network Security Agency
e-government –
SPSS – Statistical Packages for Social Science
MSMEs – micro, small, and medium-sized enterprises

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List of Tables

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Table of Contents

Contents

Acknowledgment i

List of Abbreviations ii

List of Tables iii

Table of Contents iv

ABSTRACT 0

Chapter one 1

Background of study 1

Statement of the problem 3

Research questions 3

Research Objectives 3

Significance of the study 4

Scope of the study 4

Limitations of the study 5

Chapter two: 5

Literature review 5

ICT Development: Challenges and Opportunities 7

Labour Productivity 9

Extent of Work Poverty 10

Chapter Three: 13

Research Design and Methodology 13

Research Design and Approach 13

Methodology 14

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Research Area description 14

Source and methods of data collection 15

Source of Data 15

Types of data collection method 15

Data collection method 16

Population and Sampling Procedure 17

Sampling Procedure 17

Data Analysis Techniques 20

Description of the explanatory variables 20

Dependent variable 20

Control Variables: 21

Independent Variable: 22

Model Specification 24

References 26

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ABSTRACT
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Chapter one
Background of study
Information and Communication Technology (ICT) refers to a wide range of technologies that
are used to access, process, and communicate information. ICT includes hardware, software, and
networks that enable people to share information and communicate with each other. The
development of ICT has led to significant changes in the way people live and work. According to
the definition of UNESCO, ICT (Information and Communication Technology) refers to the
technologies and systems used to store, retrieve, transmit, and manipulate information. It
encompasses a wide range of hardware, software, networks, and communication technologies
that enable various processes related to information management. The rapid advancements in
ICT have significantly impacted various industries and sectors, including education, healthcare,
business, entertainment, and communication. ICT has revolutionized the way information is
created, accessed, and shared, leading to increased efficiency, productivity, and connectivity.
With the increasing reliance on ICT, it has become vital for individuals, businesses, and
governments to adapt to the changing technological landscape. The integration of
communication technologies, such as the Internet and mobile devices, has enabled real-time
communication, collaboration, and access to vast amounts of information.
In recent years, the use of ICT has become increasingly important for economic growth and
development. According to the World Bank, access to ICT can help to reduce poverty, increase
economic growth, and improve social services (The World Bank 2007)In addition, the use of
ICT can help to improve education, healthcare, and government services.
Labor productivity refers to the amount of output that is produced per unit of labor input. It is a
measure of the efficiency of a country's workforce. Higher labor productivity can lead to higher
economic growth and higher standards of living.It is commonly measured as the ratio of total
output to the total hours worked by all employees involved in the production process.

There are several ways to measure labor productivity, including:Output per worker: Total factor
productivity: Capital-to-labor ratio.

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According to the International Labour Organization (ILO), labor productivity has increased in
many parts of the world in recent years ((ILO), 2018). However, there are still significant
differences in labor productivity between developed and developing countries The International
Labour Organization (ILO) acknowledges a positive trend in labor productivity growth globally.
However, a significant gap persists between developed and developing economies, highlighting
the need for targeted interventions. The digital divide - characterized by unequal access,
affordability, and skills in using ICT - plays a crucial role in this gap.

While ICT offers tremendous potential for boosting productivity, its benefits are not evenly
distributed. This underscores the critical need to address the digital divide, enabling developing
countries to fully leverage ICT's transformative power.

Work poverty refers to the situation where people who are employed are still living in poverty.
It is where employed individuals still struggle to meet basic needs, highlights a critical challenge
in global development. The ILO estimates that in 2017, a staggering 300 million workers were
living in extreme poverty despite having jobs. This alarming figure underscores the need for a
more nuanced understanding of employment quality, recognizing that simply having a job does
not guarantee a decent standard of living.

Low wages, poor working conditions, and limited access to social protection are key drivers of
work poverty. However, the digital divide further exacerbates this issue, particularly in
developing countries. Unequal access to and skills in utilizing ICT create a barrier to opportunity
for many workers, limiting their ability to access better jobs, training, and resources.

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Statement of the problem

Working poverty, where individuals are employed but still struggle to make ends meet and live
below the poverty line, is a significant problem in many parts of the world, including Addis
Ababa, the capital of Ethiopia. According to the World Bank, around 80% of the urban
population in Ethiopia lives in slums, often without access to basic services like clean water,
sanitation, and electricity (World Bank, 2020). This lack of access to essential infrastructure is a
key indicator of working poverty, as it contributes to poor living conditions and limited
opportunities for economic advancement.
Additionally, studies have shown that low labor productivity is a major challenge in developing
countries. The literature suggests that the effective use of information and communication
technologies (ICT) can play a crucial role in boosting labor productivity (Laddha et al., 2022).
However, the adoption and utilization of ICT in many developing countries, including Ethiopia,
remains limited, particularly in the informal and slum-dwelling sectors of the economy.

The Link between ICT, Labor Productivity, and Working Poverty

The research indicates that the effective use of ICT can have a significant positive impact on
labor productivity. A study covering 98 countries found that both telephone and broadband
subscriptions have a significant and positive effect on overall labor productivity, as well as the
productivity of the service sector (Laddha et al., 2022). This suggests that investing in ICT
infrastructure and promoting its adoption can be an effective strategy for improving labor
productivity and, by extension, reducing working poverty.
Furthermore, the literature highlights the importance of human capital development, education,
and R&D in enhancing the productivity-enhancing effects of ICT (Laddha et al., 2022). This
suggests that a comprehensive approach, which combines investments in ICT with investments
in human capital and other complementary factors, is necessary to address the problem of
working poverty and low labor productivity.Work Poverty Fuels Low Productivity, When
workers are trapped in low-paying jobs with poor working conditions, they are less likely to be
motivated, skilled, or healthy enough to contribute to high productivity. This creates a vicious
cycle, where low productivity leads to low wages, further perpetuating work poverty. Lack of

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ICT Access Amplifies the Problem The digital divide, characterized by unequal access to and
skills in using ICT, further hinders productivity and contributes to work poverty. Workers
without access to ICT are often excluded from opportunities for training, skill development,
higher-paying jobs, and access to information that could boost their productivity.

The existing literature provides valuable insights into the relationship between information and
communication technologies (ICT) and labor productivity. Several studies have found a positive
and significant impact of ICT on overall labor productivity, as well as the productivity of specific
sectors like the service industry (Laddha et al., 2022; Biagi, 2013). These findings suggest that
investing in ICT infrastructure and promoting its adoption can be an effective strategy for
improving labor productivity.
However, the research also highlights that the adoption and utilization of ICT in many
developing countries, including Ethiopia, remains limited, particularly in the informal and slum-
dwelling sectors of the economy (Laddha et al., 2022). This suggests that the problem of working
poverty and low labor productivity in Addis Ababa and other developing regions is not only a
matter of access to ICT, but also a broader issue of human capital development, education, and
complementary investments.
The existing literature has primarily focused on the direct relationship between ICT and labor
productivity, without explicitly addressing the issue of working poverty. While the research
indicates that improving labor productivity can contribute to reducing working poverty, there is a
need for a more comprehensive understanding of the mechanisms through which ICT can impact
the living and working conditions of the urban poor.
To address this research gap, the proposed study will investigate the indirect pathways through
which the effective use of ICT can influence working poverty, beyond its direct impact on labor
productivity. By adopting a more holistic approach, the study will provide a deeper
understanding of the complex interplay between ICT, labor productivity, and working poverty in
the context of Addis Ababa and other developing regions. The findings will inform the
development of comprehensive strategies and policies that can effectively address the
multifaceted challenges of working poverty and low labor productivity, leveraging the potential

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of ICT while also addressing the broader socioeconomic factors that contribute to these
problems.
Hence, this research will contribute to the existing literature by filling a critical gap in our
understanding of the impact of ICT on the living and working conditions of the urban poor, and
by providing evidence-based recommendations for policymakers and stakeholders to tackle the
complex issue of working poverty and low labor productivity in developing regions.

Research questions
 What is the current state of labor productivity and working poverty in Addis Ababa
city administration?
 How Information and Communication Technology (ICT) affect labor productivity in
Addis Ababa city administration?
 How the use of ICT affect working poverty in Addis Ababa city administration?
 How do different types of ICT investments (e.g. mobile phones, internet, enterprise
software) have varying impacts on labor productivity and working poverty reduction
in urban slum areas
 To what extent do policies and programs that improve access to affordable housing,
clean water, sanitation and electricity in urban slums mediate the relationship between
ICT, labor productivity and working poverty
 How do the productivity and poverty impacts of ICT differ for formal sector workers
compared to informal sector workers in urban slum areas? What are the implications
for policies targeting each group

Research Objectives

To investigate how investments in ICT infrastructure and human capital development interact
to influence labor productivity and reduce working poverty among residents of urban slum
areas in Addis Ababa, Ethiopia.

This research objective aims to address the following key aspects:

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 Assess the current state of ICT integration and adoption in urban slum areas of Addis
Ababa, including availability of infrastructure, access to digital resources, and utilization
of ICT-enabled platforms.
 Examine the direct and indirect impacts of ICT investments on labor productivity in the
Addis Ababa context, considering factors such as worker skills, access to basic services,
and working conditions.
 Analyze how complementary investments in human capital development (e.g. education,
training) can enhance the productivity-enhancing effects of ICT and contribute to
reducing working poverty.
 Explore the perceptions and experiences of slum residents (including workers,
entrepreneurs, and community leaders) regarding the use of ICT and its influence on their
livelihoods and living standards.
 Identify the key opportunities and challenges associated with leveraging ICT to boost
labor productivity and alleviate working poverty in the urban slum context of Addis
Ababa.
 Provide evidence-based policy recommendations to guide the design and implementation
of integrated ICT and human capital development programs that can effectively address
the multifaceted problem of working poverty in Addis Ababa and similar urban settings
in developing countries.

By addressing these research objectives, the study can contribute to filling the gaps in the
existing literature and provide valuable insights to inform policies and interventions aimed at
utilizing ICT as a tool for inclusive economic development and poverty reduction in urban
slum communities.

Significance of the study

This study has significant implications for policymakers, city administrators, and other
stakeholders who are interested in improving labor productivity and reducing working poverty in
the city. Firstly, the study will provide insights into the current state of labor productivity and
working poverty in Addis Ababa city administration, which can help policymakers and
administrators to identify the areas that require immediate attention. This information can be

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used to develop targeted policies and programs to address the issues of low labor productivity
and high working poverty.

Secondly, As stated by Asongu "ICT has the potential to transform the way businesses operate
and interact with their customers, suppliers, and employees, leading to increased productivity
and reduced costs". The study will explore the potential benefits of ICT adoption in improving
labor productivity and reducing working poverty. This information can be used to create a
roadmap for the adoption of ICT in the city administration and to develop strategies for
leveraging ICT to improve labor productivity and reduce working poverty (Asongu, (2016).

Thirdly, the study will identify the barriers to the adoption of ICT in Addis Ababa city
administration and provide recommendations on how to address these barriers. This information
can be used to create an enabling environment for the adoption of ICT in the city administration.

Finally, the study will contribute to the body of knowledge on the relationship between ICT
adoption, labor productivity, and working poverty. The findings of this study can be used as a
reference for future research on this topic. Much research was done before related to this thesis,
but most of them are focused on the importance of ICT for development. And also, they focused
on Sub Sahara Africa but this study was only a specific working age group of Addis Ababa city.

Scope of the study

The scope of the study "The Effect of Information and Communication Technology on labor
productivity and working poverty: in the Case of Addis Ababa city administration" will focus on
the city administration of Addis Ababa, Ethiopia. It mainly focuses on the working age of the
population which already has jobs in the city. The study will investigate the current state of
labor productivity and working poverty in the city administration, identify the factors that
contribute to these issues, and explore the potential benefits of ICT adoption in improving labor
productivity and reducing working poverty.

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The study will use a mixed-methods approach, including both qualitative and quantitative data
collection methods. The qualitative data will be collected through interviews and focus group
discussions with key stakeholders, such as policymakers, city administrators, and ICT experts.
The quantitative data will be collected through surveys and secondary data sources.
Overall, the scope of the study will be limited to Addis Ababa city administration, but the
findings of this study can have broader implications for other cities and regions that are
interested in leveraging ICT to improve labor productivity and reduce working poverty

The proposed research on the impact of ICT on labor productivity and working poverty in urban
slum areas of Addis Ababa, Ethiopia has several key areas of significance:
Addressing a Critical Development Challenge: Working poverty, where individuals are
employed but still live below the poverty line, is a significant problem in many developing
regions, including Addis Ababa. This study directly addresses this critical development
challenge by investigating how investments in ICT can be leveraged to boost labor productivity
and reduce working poverty in urban slum communities.
Filling a Research Gap: The existing literature has primarily focused on the direct relationship
between ICT and labor productivity, without explicitly examining the indirect pathways through
which ICT can impact the living and working conditions of the urban poor. This study aims to
fill this gap by adopting a more comprehensive approach that considers the role of
complementary factors like human capital development.
Informing Evidence-Based Policymaking: The findings of this research can provide valuable
insights to guide the design and implementation of integrated ICT and human capital
development programs that can effectively address the multifaceted problem of working poverty
in Addis Ababa and similar urban settings in developing countries.

Advancing Theoretical Understanding: By investigating the complex interplay between ICT,

human capital, labor productivity and working poverty, this study can contribute to a deeper
theoretical understanding of the mechanisms through which technological innovations can
influence socioeconomic outcomes in developing urban contexts.

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Promoting Inclusive Development: The focus on urban slum areas, where the most marginalized
populations reside, underscores the study's commitment to addressing issues of equity and
inclusion. The findings can inform policies and programs that aim to ensure the benefits of ICT-
driven productivity gains are equitably distributed.
Broader Applicability: While the study is contextualized in Addis Ababa, Ethiopia, the insights
generated can have relevance for other developing cities facing similar challenges of working
poverty and low labor productivity. The research design and methodology can also be adapted
for comparative studies in different regional settings.
In summary, this study has the potential to make significant contributions by addressing a critical
development challenge, filling an important research gap, informing evidence-based
policymaking, advancing theoretical understanding, promoting inclusive development, and
providing insights with broader applicability. The findings can have a meaningful impact on
improving the living and working conditions of the urban poor in Addis Ababa and similar
developing contexts

Limitations of the study

While the proposed research on the impact of ICT on labor productivity and working poverty in
urban slum areas of Addis Ababa, Ethiopia has significant potential to contribute to the existing
literature and inform policy, it is important to acknowledge the following limitations:

1. Geographical Scope: The study is focused on the urban slum areas of Addis Ababa, the
capital city of Ethiopia. While the insights generated may have relevance for other
developing cities facing similar challenges, the findings may not be directly generalizable
to rural areas or other regions with different socioeconomic and cultural contexts.
2. Data Availability and Quality: The study will rely on a combination of quantitative and
qualitative data sources, including household surveys, firm-level data, and interviews
with various stakeholders. The availability, reliability, and completeness of these data
sources may pose challenges and limit the depth of the analysis.
3. Complexity of the Relationships: The interactions between ICT, human capital, labor
productivity, and working poverty are inherently complex, with multiple intervening and
moderating factors. While the study aims to adopt a comprehensive approach, it may not

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be possible to fully capture all the nuances and interdependencies within the scope of a
single research project.
4. Establishing Causality: Determining the causal relationships between the key variables
of interest may be challenging, given the potential for endogeneity and the difficulty in
isolating the specific impacts of ICT investments from other concurrent socioeconomic
changes. The study will aim to employ appropriate econometric techniques to address
these methodological challenges, but some limitations in establishing causality may
persist.
5. Temporal Constraints: The study will be conducted at a specific point in time, capturing
a snapshot of the situation in Addis Ababa. However, the dynamics of ICT adoption,
labor productivity, and working poverty are likely to evolve over time, and the findings
may not fully reflect the long-term trajectories and trends in these areas.
6. Potential Biases: The qualitative data collection and analysis, such as interviews with
stakeholders, may be subject to various biases, including selection bias, response bias,
and researcher bias. The study will aim to employ appropriate strategies to minimize
these biases, but their complete elimination may not be feasible.

Despite these limitations, the proposed research will strive to provide a robust and
comprehensive analysis of the impact of ICT on labor productivity and working poverty in the
context of urban slum areas in Addis Ababa. The findings will be interpreted with due
consideration of the limitations, and the study will acknowledge the need for further research to
corroborate and expand upon the insights generated.

Chapter two:
Literature review

The issue of working poverty, where individuals are employed but still struggle to make ends
meet and live below the poverty line, has been extensively studied in the literature. The existing
research highlights several key factors contributing to this problem, including low wages,

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inadequate benefits, part-time or insecure work, unaffordable housing, lack of access to

education and training, and discrimination (Kalleberg, 2011; Shaefer & Edin, 2017).
One of the most comprehensive studies on working poverty was conducted by the U.S.
Department of Labor, which defined the working poor as "persons who spent at least 27 weeks
[in the past year] in the labor force (that is, working or looking for work), but whose incomes fell
below the official poverty level" (U.S. Department of Labor, 2021). According to this definition,
there were 6.9 million individuals classified as working poor in the United States as of 2017
(U.S. Department of Labor, 2021).
The literature also highlights the importance of employment quality in determining whether a job
can effectively lift an individual or household out of poverty. A study by the International Labor
Organization (ILO) found that "promoting productive employment is the best route out of
poverty" (ILO, 2019, p. 12). The report emphasizes the need for fast, sustained, employment-
intensive and equitable economic growth to reduce poverty through the enhancement of
productive employment opportunities (United Nations, 1999).
The working poor face unique obstacles compared to the nonworking poor, such as finding
affordable housing, arranging transportation to and from work, and buying basic necessities
(Shaefer & Edin, 2017). These challenges are particularly acute for certain groups, such as
women, racial and ethnic minorities, and single parents (Kalleberg, 2011; Econofact, 2023).
To address the problem of working poverty, the literature suggests a multifaceted approach,
including policies that raise the minimum wage, improve job security, increase access to
affordable housing and childcare, and provide access to education and training opportunities
(Kalleberg, 2011).
The United Nations report emphasizes the need for both broad socio-economic and gender-
specific policy interventions to address the interlocking problems of poverty and employment
(United Nations, 1999).
In addition to these socioeconomic factors, recent studies have explored the potential role of
information and communication technologies (ICT) in influencing labor productivity and
working poverty reduction. A study by Laddha et al. (2022) found that both telephone and
broadband subscriptions have a significant and positive effect on overall labor productivity, as
well as the productivity of the service sector. This suggests that investing in ICT infrastructure

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and promoting its adoption can be an effective strategy for improving labor productivity and, by
extension, reducing working poverty.
Furthermore, the literature highlights the importance of human capital development, education,
and R&D in enhancing the productivity-enhancing effects of ICT (Laddha et al., 2022). This
suggests that a comprehensive approach, which combines investments in ICT with investments
in human capital and other complementary factors, is necessary to address the problem of
working poverty and low labor productivity.
In the context of developing countries like Ethiopia, where working poverty is particularly
prevalent, the adoption and utilization of ICT remains limited, especially in the informal and
slum-dwelling sectors of the economy (Laddha et al., 2022). This underscores the need for
targeted interventions to improve access to ICT infrastructure and promote its effective use in
these underserved communities.
Information and Communication Technology (ICT) has been identified as a key driver of
economic growth and development in many countries. ICT can help to improve labor
productivity by increasing efficiency, reducing costs, and improving communication (Asongu,
(2016);
A research article by Asongu and Nwachukwu (2016) that investigates the role of governance in
the adoption of mobile phones for inclusive human development in sub-Saharan Africa. The
authors argue that mobile phones can be a powerful tool for inclusive human development, but
their adoption is hindered by factors such as corruption, political instability, and weak
institutions.
The study uses a panel data analysis approach to examine the relationship between governance,
mobile phone adoption, and inclusive human development in 49 sub-Saharan African countries.
The authors find that good governance, measured by indicators such as political stability, rule of
law, and control of corruption, is positively associated with mobile phone adoption and inclusive
human development.
The study has important implications for policymakers and practitioners who are interested in
promoting inclusive human development in sub-Saharan Africa. The authors suggest that
improving governance can help to create an enabling environment for the adoption of mobile
phones and other ICTs, leading to more inclusive human development outcomes.

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In addition, ICT can help to reduce working poverty by creating new jobs, increasing income,
and improving access to education and training (Kshetri, 2018).
However, the adoption of ICT can be challenging, particularly in developing countries like
Ethiopia. Limited infrastructure, low levels of digital literacy, and high costs are some of the
barriers that can hinder the adoption of ICT (Asongu, (2016). In addition, there is a need for
policies and programs that can support the adoption of ICT and ensure that its benefits are
distributed equitably (Kshetri, 2018)
Studies have shown that the adoption of ICT can have a positive impact on labor productivity
and working poverty. For example, a study by (Asongu, (2016)found that good governance can
facilitate the adoption of mobile phones in sub-Saharan Africa, leading to inclusive human
development. Another study (Kshetri, 2018)found that blockchain technology can help to meet
key supply chain management objectives, such as reducing costs and improving transparency.
In the context of Addis Ababa city administration, there is a need for research that investigates
the relationship between ICT adoption, labor productivity, and working poverty. This research
can provide valuable insights into how ICT can be leveraged to improve labor productivity and
reduce working poverty in the city administration.

Information and communication technology (ICT) has become an increasingly important factor
in economic development, affecting labor productivity and work poverty. In Addis Ababa, the
capital city of Ethiopia, there has been growing interest in studying the impact of ICT on labor
productivity and work poverty, particularly in the context of the city's informal sector.
Information and Communication Technology (ICT) has become an integral part of economic
development worldwide. It has revolutionized various aspects of society, including
communication, education, healthcare, and business. In the context of Addis Ababa, the capital
city of Ethiopia, the adoption and utilization of ICT have surged in recent years. This literature
review aims to explore the relationship between ICT, labor productivity, and work poverty in
Addis Ababa. By assessing previous studies and research findings, we will gain insights into the
extent to which ICT has affected labor productivity and work poverty in the city.

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ICT Development: Challenges and Opportunities

The International Telecommunication Union (ITU) reports that there are now over 4.9 billion
active Internet users worldwide, representing a significant portion of the global population. This
highlights the widespread adoption and utilization of the Internet across the globe. The report
also notes the rapid growth of mobile-broadband subscriptions, which reached 5.3 billion by the
end of 2020 (International Telecommunication Union (ITU), 2019). This signifies the increasing
reliance on mobile devices for internet access and communication, further highlighting the
influence of ICT. The World Economic Forum (WEF) identifies key trends in ICT that shape the
digital landscape, including the rise of Artificial Intelligence (AI) and the Internet of Things
(IoT). AI has found applications in various fields and has the potential to revolutionize industries
and enhance efficiency. IoT has enabled the development of smart homes, cities, and
interconnected devices, leading to improved automation and convenience. Lastly, the statement
highlights the significance of 5G networks, which offer faster speeds, lower latency, and
increased capacity. Overall, the statement emphasizes the pervasive impact of ICT on our lives
and its potential for driving innovation and advancing technology. (World Economic Forum,
2021)

The growth of ICT in sub-Saharan Africa has been significant in recent years, however,
challenges remain. According to the World Bank, internet penetration in the region was only at
26.5% in 2019, compared to the global average of 53.6% (World Bank, Internet users (per 100
people), 2021). On the other hand, mobile phone penetration is much higher, with over 400
million unique mobile subscribers as of 2020 (GSMA, 2020).To bridge the digital divide, the
African Union has launched the "Smart Africa" initiative, to achieve universal internet access by
2030. The initiative aims to improve connectivity, promote affordable access, strengthen digital
skills, and encourage the use of ICT for socio-economic development. Although mobile phone
usage has grown rapidly, internet access remains a challenge in sub-Saharan Africa. The "smart
Africa" initiative serves as a strategic framework to address these challenges and ensure that
more people in the region can benefit from the opportunities offered by the digital age (African
Union).

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ICT penetration in Ethiopia has been growing steadily but is still relatively low compared to
global averages. While internet and fixed broadband subscription rates are limited, the mobile
sector has seen significant growth with over 56 million mobile subscriptions in 2020. The
government has implemented initiatives and policies such as the "Ethiopian Digital
Transformation Strategy" and the "Ethio Telecom" initiative to promote ICT development and
enhance connectivity (International Telecommunication Union, Measuring digital development:
Facts and figures, 2021). The digitization of government services, known as e-government, has
also gained momentum in Ethiopia, with online portals introduced to increase efficiency, reduce
corruption, and enhance access to government services. (Ethiopian Digital Transformation
Agency, 2025).
Ethiopia faces several challenges in its ICT development, including limited internet access in
rural areas, infrastructure constraints, and a lack of technical expertise and funding. However,
with a large and young population, there is significant potential for leveraging ICT to drive
economic growth, job creation, and social development. Efforts are underway to build digital
skills among the youth through initiatives like the "Jobs Creation Commission" and
collaborations with educational institutions. (The World Bank).
Addis Ababa, the capital city of Ethiopia, has seen significant developments in the field of
Information and Communication Technology (ICT) in recent years. The government has
recognized the importance of ICT in driving economic growth, innovation, and improving
various sectors of society. Telecommunication Infrastructure: Addis Ababa has witnessed a
remarkable improvement in its telecommunication infrastructure. The city is well-connected with
extensive fiber-optic networks, providing high-speed internet access to businesses, educational
institutions, and households (Ethiopian Embassy, 2020). Mobile phone usage has witnessed
substantial growth in Addis Ababa. The availability of affordable smartphones and competitive
mobile service providers has led to increased mobile penetration in the city (International
Telecommunication Union (ITU), 2019). The Addis Ababa city administration has embraced e-
governance initiatives to enhance service delivery and promote transparency. Citizens can access
various government services online, such as bill payments, tax filings, and obtaining
permits/license renewals (Addis Ababa City Government, 2021). Several technology hubs,
incubators, and co-working spaces have emerged, fostering an entrepreneurial ecosystem and
providing support for young innovators (Ethiopian Herald, 2021).

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The purpose of this Thesis is to examine how information and communication technology (ICT)
affects labor productivity and working poverty in Addis Ababa, Ethiopia. ICT has transformed
various industries and economies around the world, leading to greater productivity and economic
growth. However, ICT progress creates new jobs and causes displacement of some jobs, opening
new opportunities for workers with the necessary skills.
Addis Ababa, the capital city of Ethiopia, is home to millions of people and a growing economy.
However, many of its residents still live in poverty and struggle to find work opportunities that
can provide them with a decent income. The growing adoption of ICT in different aspects of
work has implications for labor productivity and poverty among the working population. Thus,
this study examines how ICT affects labor productivity and working poverty in Addis Ababa.

Labor Productivity
Labor productivity is a crucial factor in economic growth and development, as it measures the
amount of goods or services produced by an individual worker or a group of workers in a given
period. In recent years, there has been growing interest in labor productivity in various regions of
the world, including developed and developing countries. According to the World Bank, global
labor productivity has been increasing slowly but steadily over the past decade, with an average
annual growth rate of 2.2% between 2000 and 2019. However, there are significant variations in
labor productivity levels across different regions and countries. (World Bank, Labor productivity
growth (annual %), 2021)
For example, labor productivity in advanced economies such as the United States, Japan, and
Germany is generally higher than in developing economies such as India, Indonesia, and Nigeria.
This can be attributed to factors such as differences in education levels, technology adoption
rates, and infrastructure quality. Furthermore, there are significant variations in labor
productivity levels within countries as well. In many developed countries, there are significant
disparities in labor productivity between urban and rural areas, with urban areas generally having
higher productivity levels due to better access to education, technology, and infrastructure.
In sub-Saharan Africa, labor productivity levels have been increasing slowly but steadily over
the past decade as well, with an average annual growth rate of 1.6% between 2000 and 2019.

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However, labor productivity levels in sub-Saharan Africa still lag behind other regions such as
East Asia and the Pacific. (African Development Bank Group, 2021)

One of the main factors that affect labor productivity in Ethiopia is technology adoption. The
country faces challenges in accessing and implementing new technologies due to limited
resources and infrastructure. However, there have been some successful initiatives to promote
technology adoption, such as the use of mobile phones for banking and other financial services.
Government policies also play a crucial role in promoting labor productivity in Ethiopia. For
example, policies that promote investment in infrastructure such as transportation networks and
energy systems can help reduce production costs and increase efficiency. Similarly, policies that
promote entrepreneurship and innovation can help create new job opportunities and boost
economic growth. In Addis Ababa, the capital city of Ethiopia, there has been significant growth
in the manufacturing sector in recent years, which has contributed to higher labor productivity
levels. The government has launched various policies aimed at promoting labor productivity and
economic growth, including the Ethiopia Industrial Parks Development Corporation (IPDC) to
attract foreign investment and promote the development of manufacturing industries. (Ethiopia
Industrial Parks Development Corporation, 2021)

Extent of Work Poverty

Work poverty refers to the condition where people work but still live in poverty. It is a
phenomenon that affects millions of people around the world, including in Africa, Sub-Saharan
Africa, Ethiopia, and Addis Ababa. This paper explores the extent of work poverty in these
regions and the factors that contribute to it. Additionally, it examines the impact of work poverty
on individuals and societies and the policies and interventions that can help alleviate it.
According to the International Labor Organization (ILO), more than 630 million workers
worldwide live in extreme or moderate poverty, earning less than $3.20 per day (ILO, 2018).
This represents almost 20% of the global workforce. The majority of these workers are
concentrated in developing countries, particularly in South Asia and Sub-Saharan Africa.
In Africa, the prevalence of work poverty is high, with an estimated 70% of workers living
below the poverty line (African Development Bank (AfDB), Organization for Economic Co-

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operation and Development (OECD), United Nations Development Programme (UNDP), United
Nations Economic Commission for Africa (UNECA)., 2012). In Sub-Saharan Africa, the
situation is even more dire, with approximately 85% of workers living in poverty
(ILO, 2018). This is largely due to factors such as low wages, high unemployment rates, and
limited access to social protection.
In Ethiopia, work poverty is a significant issue, particularly in the informal sector. According to
a study by the Ethiopian Economic Association (EEA), approximately 60% of workers in the
informal sector live below the poverty ((EEA)., 2016). In Addis Ababa, the capital city of
Ethiopia, work poverty is also prevalent, with many workers in the informal sector earning low
wages and lacking access to social protection (Addis Ababa City Administration, 2018).
(African Development Bank (AfDB), Organization for Economic Co-operation and
Development (OECD), United Nations Development Programme (UNDP), United Nations
Economic Commission for Africa (UNECA)., 2012)Several factors contribute to work poverty in
these regions. One major factor is low wages. Many workers in the informal sector earn low
wages that are not sufficient to support themselves and their families. Additionally, high
unemployment rates and limited access to social protection exacerbate work poverty. Workers in
the informal sector often lack access to basic social protections such as health insurance and
pensions. Work poverty has significant negative impacts on individuals and societies. It can lead
to poor health outcomes, limited access to education and training, and reduced economic
mobility. Additionally, it can contribute to social unrest and political instability.

Work poverty is a significant issue that affects millions of workers around the world. It is
particularly prevalent in Africa. Low wages, high unemployment rates, and limited access to
social protection are key factors contributing to work poverty. Policies and interventions such as
formalization of the informal sector, increasing access to education and training, and social
protection programs can help alleviate work poverty and promote economic growth and
development.

ICT and Labor Productivity:

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Several studies have examined the relationship between ICT use and labor productivity in Addis
Ababa. For example, a study by (Alemayehu D., 2021)found that the adoption of ICT in the
manufacturing sector had a positive impact on labor productivity. Similarly, a study by (Belay
M., 2013)found that the use of ICT in service sector firms was positively related to labor
productivity. These findings suggest that ICT can be an important tool for improving labor
productivity in Addis Ababa.
Studies have shown that the use of technology, such as computers, smartphones, and software
applications, enhances task efficiency and reduces processing time. (Asfaw A. M. & Kuma W.
W., 2016)found that the utilization of ICT tools, particularly in manufacturing and service
sectors, significantly increased productivity levels in Addis Ababa. Similarly, a study conducted
by (Gelaw F. M. & Asrat, 2018)revealed that the integration of ICT improved the productivity
and competitiveness of micro, small, and medium-sized enterprises (MSMEs).
ICT and Work Poverty:
Work poverty refers to the situation where individuals engaged in gainful employment earn
below the poverty line. The role of ICT in reducing work poverty is multifaceted. Firstly,
technological advancements have led to the emergence of new job opportunities in the ICT
sector itself. This not only increases employment options but also provides higher-paying jobs to
individuals with relevant skills. As highlighted by (Scholz R. W., 2020), the expansion of ICT-
related industries has the potential to create a more inclusive and equitable labor market.
Furthermore, ICT adoption in other sectors indirectly influences work poverty by boosting
overall economic growth. Empirical evidence suggests that increased productivity resulting from
ICT usage can lead to higher wages for workers. (Mengistie A., 2018)observed that the
manufacturing and service sectors in Addis Ababa experienced a positive correlation between
ICT adoption, increased wages, and reduced work poverty.
There has also been research on the relationship between ICT use and work poverty in Addis
Ababa. A study by (Adugna B. Kifle M. & Bekele A., 2018)found that informal sector workers
who used ICT were less likely to experience work poverty than those who did not use ICT.
However, this relationship was not significant for workers in the formal sector. Another study by
(Tsegaye M. Woldi A. & Mulugeta S., 2020)found that micro and small enterprises (MSEs) that
adopted ICT were more likely to reduce work poverty.

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This literature review has highlighted the important role of ICT in enhancing labor productivity
and reducing work poverty in Addis Ababa. The adoption and integration of ICT have
contributed to increased efficiency, new job opportunities, and improved wages. However,
challenges such as the digital divide and regional disparities need to be addressed to ensure
inclusive growth and sustainable development. Policymakers, government institutions, and other
stakeholders should collaborate in promoting ICT infrastructure development, skill enhancement,
and equal access to information and technology within Addis Ababa and its surrounding areas.

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Chapter Three:

Methodology
Research Design and Approach

Research Design
The research design for this study involves both descriptive and explanatory research designs.
According to (Creswell, 2014), descriptive research design is used to describe the characteristics
of a population or phenomenon, while explanatory research design is used to explain the causal
relationship between variables. In this study, a descriptive research design will be applied to
describe how ICT affects labor productivity and working poverty in Addis Ababa City
administration, while an explanatory research design will be applied to explain the causal
relationship between the dependent variables and independent variables.

The study will employ a mixed-methods research design, combining quantitative and qualitative
approaches. This will allow for a comprehensive understanding of the complex relationships
between ICT, human capital, labor productivity, and working poverty.
Data Collection

Quantitative Data:
Household survey data: The study will conduct a household survey in selected urban areas of
Addis Ababa to collect data on household demographics, employment status, income, access to
ICT, and other relevant socioeconomic indicators.
Firm-level data: The study will also collect data from businesses operating in the urban slum
areas, focusing on their use of ICT, productivity measures, and employment characteristics.
Secondary data: The study will utilize existing secondary data sources, such as national census
data, labor force surveys, and ICT infrastructure reports, to supplement the primary data
collection.

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Qualitative Data:
In-depth interviews: The study will conduct semi-structured interviews with key stakeholders,
including slum residents, community leaders, policymakers, and ICT service providers, to gain a
deeper understanding of the perceptions, experiences, and challenges related to ICT adoption and
its impact on labor productivity and working poverty.
Focus group discussions: The study will organize focus group discussions with various groups
(e.g., workers, entrepreneurs, youth) to explore the nuances of ICT utilization and its influence
on their livelihoods and living conditions.
Sampling
Quantitative Sampling:
The study will employ a multi-stage sampling technique to select the urban slum areas and
households for the survey. This may involve a combination of purposive and random sampling
methods to ensure representativeness.
For the firm-level data, the study will use a stratified random sampling approach to select
businesses operating in the targeted urban slum areas, considering factors such as size, sector,
and ICT usage.
Qualitative Sampling:
The study will use a purposive sampling approach to identify and select the key informants for
the in-depth interviews, ensuring a diverse representation of stakeholders.
For the focus group discussions, the study will employ a combination of purposive and snowball
sampling techniques to recruit participants from the target population.
Data Analysis
Quantitative Analysis:
Descriptive statistics: The study will calculate descriptive statistics, such as means, standard
deviations, and frequencies, to provide an overview of the key variables and their distribution.
Econometric modeling: The study will employ appropriate econometric techniques, such as
regression analysis and structural equation modeling, to examine the direct and indirect
relationships between ICT, human capital, labor productivity, and working poverty.
Time-series analysis: The study may also incorporate time-series analysis to investigate the
dynamic relationships and potential lagged effects between the variables of interest.

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Qualitative Analysis:
Thematic analysis: The study will conduct a thematic analysis of the interview and focus group
transcripts to identify key themes, patterns, and insights related to the research objectives.
Content analysis: The study may also employ content analysis techniques to analyze secondary
data sources, such as policy documents and reports, to contextualize the findings.
Integration of Findings:
The quantitative and qualitative findings will be integrated to provide a comprehensive
understanding of the research problem and to triangulate the results.
The quantitative research approach adopted in this study involves the collection of numerical
data that can be analyzed using statistical methods. According to (Leedy, 2013), quantitative
research approach is useful for obtaining precise measurements of variables and testing
hypotheses. In this study, the quantitative research approach will be used to test the hypothesis
that ICT adoption and usage effect on labor productivity and on a working poverty. The data
collected will be analyzed using statistical software.

Hence, the combination of descriptive and explanatory research designs, along with a
quantitative research approach, will enable this study to provide a comprehensive analysis of the
relationship between ICT, labor productivity, and working poverty in Addis Ababa City
administration. The findings of this study will be useful for policymakers, employers, workers,
and other stakeholders who are interested in promoting economic and social development in
Addis Ababa City administration.

Sampling Procedure
Sampling is a crucial aspect of research, and the size of the sample and the method used to select
it can have an impact on the accuracy and reliability of the data generated. According to
Malhorta and Peterson (2006) and Zikmund (2003), a larger sample size generally leads to more
accurate data. This is because a larger sample size reduces the likelihood of chance variations or
errors that may occur in smaller samples.
However, the feasibility of using a large sample size may be limited by factors such as time,
financial constraints, or the nature of the population being studied. In such cases, researchers

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may opt to use alternative sampling methods that can still generate reliable data. For example,
Carvalho's (1984) method, as cited in Malhorta (2007), this was one such alternative method in
this research.

As per the data base of Central Statistics Agency (CSA) from the 25th of January to the 24th of
February 2021, 1891,814 of population are economically active population the following chart is
with employed population of 1474211 of 809331 male 664880 female no of total employe in the
city are total of 524,740which are distributed in eleven sub city. The following tables show the
distribution of no of employees among sub city.
2,000,000 1,891,814
1,800,000
1,600,000 1,474,211
1,400,000
1,200,000 955,152
1,000,000 936,663 809,331
664,880
800,000
600,000
417,603
400,000 145,821 271,782
200,000
0
Economically Active Popolation Employeed Population Unemployed population

Total Male Female

ETHIOPIA 2021 LABOUR FORCE AND MIGRATION SURVEY Central Statistics Agency
(CSA) [Ethiopia] 2021. Labour Force and Migration Survey Key Findings. Addis Ababa,
Ethiopia.
Addis Ababa Total Male Female

Economically Active Population 1,891,814 955,152 936,663

employed Population 1,474,211 809,331 664,880

Unemployed population 417,603 145,821 271,782

Unemployment Rate 22.1 15.3 29

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The Link between ICT, Labor Productivity, and Working Poverty in Addis Ababa
The research indicates that the effective use of ICT can have a significant positive impact on
labor productivity. A study covering 98 countries found that both telephone and broadband
subscriptions have a significant and positive effect on overall labor productivity, as well as the
productivity of the service sector (Laddha et al., 2022). This suggests that investing in ICT
infrastructure and promoting its adoption can be an effective strategy for improving labor
productivity and, by extension, reducing working poverty in Addis Ababa.

Furthermore, the literature highlights the importance of human capital development, education,
and R&D in enhancing the productivity-enhancing effects of ICT (Laddha et al., 2022). This
suggests that a comprehensive approach, which combines investments in ICT with investments
in human capital and other complementary factors, is necessary to address the problem of
working poverty and low labor productivity in Addis Ababa.

Sample Size Formula for Studying the Impact of ICT on Labor Productivity and Working
Poverty in Addis Ababa
To determine an appropriate sample size for studying the impact of ICT on labor productivity
and working poverty in Addis Ababa, the following formula can be used:
The Data of Employee from our sample companies and Government office as well as the Firm
are put as follows:- (DASHEN BANK) 10,000 person, Ministry Of Finance 2000, small
business owner 300
DASHEN BANK
- Population size (N) = 10,000
- Confidence level = 90%
- Margin of error (e) = 5%
- Expected response distribution (p) = 50% = 0.5

Using the formula:

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n = Z^2 * p(1-p) / e^2

n = (1.645)^2 * 0.5(1-0.5) / (0.05)^2
n = 2.706 * 0.25 / 0.0025
n = 0.6765 / 0.0025
n = 270.6

Applying the finite population correction:

final = 270.6 / (1 + 270.6/10000)
final = 270.6 / (1 + 0.0271)
final = 270.6 / 1.0271
final = 263

Government Office Group

- Population size (N) = 2,000
- Confidence level = 90%
- Margin of error (e) = 5%
- Expected response distribution (p) = 50% = 0.5

Using the formula:

n = (1.645)^2 * 0.5(1-0.5) / (0.05)^2
n = 2.706 * 0.25 / 0.0025
n = 0.6765 / 0.0025
n = 270.6

Applying the finite population correction:

final = 270.6 / (1 + 270.6/2000)
final = 270.6 / (1 + 0.1353)
final = 270.6 / 1. 1353

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final = 238

Small Business Owners Group

- Population size (N) = 3,000
- Confidence level = 90%
- Margin of error (e) = 5%
- Expected response distribution (p) = 50% = 0.5

Using the formula:

n = (1.645)^2 * 0.5(1-0.5) / (0.05)^2
n = 2.706 * 0.25 / 0.0025
n = 0.6765 / 0.0025
n = 270.6

Applying the finite population correction:

N = 270.6 / (1 + 270.6/300)
n = 270.6 / (1 + 0.902)
n = 270.6 / 1.902
n = 142

Total Sample Size

Adding up the individual group sample sizes:
- NGO: 263 participants
- Government Office: 238 participants
- Small Business Owners: 142 participants

The total sample size for the study is 643 participants.

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Data Analysis Techniques

Data Analysis Techniques

The study will employ a range of quantitative and qualitative data analysis techniques to
investigate the impact of information and communication technologies (ICT) on labor
productivity and working poverty in Addis Ababa, Ethiopia.
Quantitative Data Analysis
Descriptive Statistics: The study will calculate descriptive statistics, such as means, standard
deviations, and frequencies, to provide an overview of the key variables and their distribution
within the sample population. This will include analyzing demographic characteristics of the
respondents, the prevalence of working poverty, and the access to and usage of ICT.

Correlation Analysis: The researchers will assess the strength and direction of the relationship
between ICT access/usage and various labor productivity indicators. Additionally, they will
identify the correlations between ICT, human capital development factors (e.g., education,
training), and working poverty measures to determine the significant associations between the
variables of interest.

Regression Analysis: Multiple linear regression models will be employed to examine the direct
and indirect effects of ICT on labor productivity and working poverty. The models will control
for potential confounding factors, such as demographic characteristics, socioeconomic status,
and access to basic services. The goodness-of-fit of the models and the statistical significance of
the coefficients will be evaluated.
Structural Equation Modeling (SEM): Structural equation modeling will be used to test the
hypothesized relationships between ICT, human capital development, labor productivity, and
working poverty. The researchers will specify the measurement and structural models based on
the theoretical framework and existing literature, and evaluate the model fit and the significance
of the path coefficients.

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Qualitative Data Analysis

Thematic Analysis: The study will conduct a thematic analysis of the qualitative data collected
through in-depth interviews and focus group discussions. The researchers will identify key
themes, patterns, and insights related to the perceptions, experiences, and challenges associated
with ICT adoption and its impact on labor productivity and working poverty. Coding techniques
will be used to categorize and analyze the qualitative data.

Content Analysis: The researchers will analyze secondary data sources, such as policy
documents, reports, and media articles, to contextualize the findings and identify relevant
themes. The content analysis will involve quantifying the frequency and prevalence of specific
concepts, terms, or ideas related to ICT, labor productivity, and working poverty in the textual
data, providing a systematic and objective description of the content to supplement the primary
data analysis.
The combination of these quantitative and qualitative data analysis techniques will provide a
comprehensive and rigorous assessment of the impact of ICT on labor productivity and working
poverty in Addis Ababa. The findings will inform evidence-based policymaking and guide the
design of interventions aimed at leveraging ICT for inclusive economic development and poverty

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Description of the explanatory variables

Dependent variable
In the research "The effect of Information and Communication Technology on labor productivity
and Working Poverty: in the Case of Addis Ababa City Administration", the dependent variables
of labor productivity and working poverty are important indicators of economic and social
development. Here's a more detailed description of each:
Labor productivity: This refers to the amount of output produced by a worker in a certain period,
such as per hour or day. In the context of this research, labor productivity is an important
measure of the efficiency and effectiveness of workers in Addis Ababa City administration.
Higher labor productivity can lead to increased economic growth, higher wages, and improved
living standards for workers.
Working poverty: This refers to the proportion of workers who earn less than a certain threshold,
such as the poverty line. In the context of this research, working poverty is an important measure
of the extent to which workers in the Addis Ababa City administration can earn a decent living
from their work. High levels of working poverty can lead to poor living conditions, lack of
access to basic needs, and limited opportunities for social mobility.

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Together, these two variables provide insights into the economic and social well-being of
workers in the Addis Ababa City administration. By examining the relationship between these
variables and information and communication technology (ICT), the research can provide
valuable insights into how ICT can be leveraged to improve labor productivity and reduce
working poverty in this context.
Control Variables:
Age: The age of the worker, which may be related to labor productivity and working poverty.
Gender: The gender of the worker, which may be related to labor productivity and working
poverty due to differences in opportunities and discrimination.
Education level: The level of education attained by the worker, which may be related to labor
productivity and working poverty due to differences in skills and knowledge.
Marital status: The marital status of the worker, which may be related to labor productivity and
working poverty due to differences in responsibilities and support.
Years of work experience: The number of years the worker has been in the workforce, which
may be related to labor productivity and working poverty due to differences in skills and
knowledge.
Employment sector: The sector in which the worker is employed, which may be related to labor
productivity and working poverty due to differences in opportunities and wages.
Geographic location: The location where the worker is employed, which may be related to labor
productivity and working poverty due to differences in opportunities and cost of living.
Income level: The level of income earned by the worker, which may be related to labor
productivity and working poverty due to differences in financial security and access to resources.
Employment status: The employment status of the worker, such as full-time or part-time, which
may be related to labor productivity and working poverty due to differences in benefits and
stability.
Working hours: The number of hours worked by the worker, which may be related to labor
productivity and working poverty due to differences in fatigue and work-life balance.
These control variables can be used in an OLS model to estimate their effect on labor
productivity or working poverty while controlling for the effect of ICT adoption and usage,
education level, work experience, and industry sector.

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Variables Measurement Source

ICT
Labor productivity Output / amount of labor Xyz (2023)
employed
Working Poverty

Independent Variable:
For the research on "The effect of Information and Communication Technology on labor
productivity and Working Poverty: in the case of Addis Ababa City Administration" there are
independent variables as follows:
Information and Communication Technology (ICT) adoption rate of firms: The percentage of
firms in Addis Ababa City administration that have adopted ICT.
ICT investment level of firms: The amount of money invested by firms in Addis Ababa City
administration in ICT.
ICT skill level of workers in firms: The level of skills and knowledge that workers in Addis
Ababa City administration have in using ICT.
ICT usage intensity in firms: The extent to which ICT is used by firms in Addis Ababa City
administration.
ICT policy and regulation in firms: The policies and regulations that govern the use of ICT by
firms in Addis Ababa City administration.
Access to ICT services for firms: The availability and accessibility of ICT services for firms in
Addis Ababa City administration.

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ICT innovation level of firms: The level of innovation in the use of ICT by firms in Addis Ababa
City administration.
Government policies on ICT adoption and investment: The policies and programs implemented
by the government of Ethiopia to promote ICT adoption and investment.
Availability of broadband internet access: The availability and quality of broadband internet
access in Addis Ababa City administration.
Availability of mobile network coverage: The availability and quality of mobile network
coverage in Addis Ababa City administration.
Availability of electricity supply: The availability and reliability of electricity supply in Addis
Ababa City administration, which is necessary for the use of ICT.
Availability of ICT hardware and software: The availability and quality of hardware and
software needed for the use of ICT by firms in Addis Ababa City administration.
ICT training and education programs: The availability and quality of training and education
programs for workers and firms in Addis Ababa City administration to improve their skills and
knowledge in using ICT.
ICT support services: The availability and quality of support services for workers and firms in
Addis Ababa City administration to assist them in using ICT.
Network effects: The effects that arise from the interaction between different users of ICT, such
as the benefits that come from increased connectivity and communication.
Market structure and competition level in technology markets: The level of competition and
market structure in the technology market, may affect the adoption, usage, and innovation of ICT
by firms in Addis Ababa City administration.
International trade and technology transfer: The extent to which Ethiopia engages in international
trade and technology transfer, which may affect the availability, accessibility, and quality of ICT
resources for firms in Addis Ababa City administration.
Cultural factors affecting technology adoption and usage: The cultural factors, such as attitudes,
beliefs, and values, that may affect the adoption, usage, and innovation of ICT by firms in Addis
Ababa City administration.

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Legal and regulatory framework affecting technology adoption and usage: The legal and
regulatory framework that governs the adoption, usage, and innovation of ICT by firms in Addis
Ababa City administration.
Political incentives for technology adoption and usage: The political incentives, such as tax
incentives or subsidies, that may encourage or discourage the adoption, usage, and innovation of
ICT by firms in the Addis Ababa City administration.
These independent variables will be used to estimate the effect of ICT adoption and usage on
labor productivity and working poverty while controlling for other relevant factors such as
education, experience, industry, and control variables.

Model Specification

To Capture The effect of Information and Communication Technology on labor productivity and
working Poverty: in the case of Addis Ababa City administration, we have divided the
interaction is the variables between effect of ICT on Labor Productivity as well as Effect of ICT
on the Working poverty, Hence the following linear model was developed. An Ordinary Least
Squares (OLS) model that can be used to estimate the effect of ICT adoption and usage on labor
productivity and working poverty in Addis Ababa City administration:

The OLS model specification for this study is as follows:

1. Labor Productivity Model
ln(Productivity_i) = Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + β5X5 + β6X6 + β7X7 + β8X8 + ε
Where:
• ln(Productivity_i): Natural logarithm of labor productivity for individual i (e.g., output per hour
worked).
• β₀: Intercept term.
• β₁: Coefficient for ICT Access (e.g., internet access, smartphone ownership), representing the
impact of ICT access on productivity
• β₂: Coefficient for ICT Skills (e.g., digital literacy, specific software skills), representing the
impact of digital skills on productivity.

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• β₃: Coefficient for Sector (e.g., agriculture, manufacturing, services), representing the sector-
specific impact on productivity.
• β₄: Coefficient for Location (e.g., urban vs. rural districts), representing the location-specific
impact on productivity.
• β₅: Coefficient for Education (e.g., years of schooling, type of education), representing the
impact of education on productivity.
• β₆: Coefficient for Age (e.g., age group), representing the impact of age on productivity.
• β₇: Coefficient for Gender, representing any gender differences in productivity.
• β₈: Coefficient for Informal Sector (e.g., 1 for working in the informal sector, 0 otherwise),
representing the impact of working in the informal sector on productivity.
• εi: Error term
The OLS model will estimate the coefficients of the independent variables and the intercept (β0)
using the least squares method.

2. Working Poverty Model:

Working Poverty i = γ₀+γ₁ +γ₂ +γ₃ +γ₄ + γ₅ + γ₆ + γ₇ + γ₈ + νi

• Working_Poverty_i: A binary variable (0 = not in work poverty, 1 = in work poverty) for

individual i.

•γ₀: Intercept term.

• γ₁: Coefficient for ICT Access.

• γ₂: Coefficient for ICT Skills.

• γ₃: Coefficient for Income (e.g., monthly income, daily wage), representing the impact of
income on work poverty.

• γ₄: Coefficient for Social Protection (e.g., access to health insurance, unemployment benefits),
representing the impact of social protection on work poverty.

•γ₅: Coefficient for Education.

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•γ₆: Coefficient for Age.

•γ₇: Coefficient for Gender.

•γ₈: Coefficient for Informal Sector.

• νi: Error term.

Statistical Analyses
The study will employ a range of statistical techniques to analyze the impact of information and
communication technologies (ICT) on labor productivity and working poverty in Addis Ababa,
Ethiopia. The analyses will be conducted using Stata and R statistical software packages.
Descriptive Statistics
Descriptive statistics, including means, standard deviations, and frequencies, will be calculated
to provide an overview of the key variables and their distribution within the sample population.
This will include analyzing demographic characteristics of the respondents, the prevalence of
working poverty, and the access to and usage of ICT. The results will be presented using tables
and graphs.
Correlation Analysis
Pearson's correlation coefficients will be used to assess the strength and direction of the
relationship between ICT access/usage and labor productivity indicators. The study will also
identify the correlations between ICT, human capital development factors (e.g., education,
training), and working poverty measures. The statistical significance of the correlations will be
tested using t-tests or p-values, with a significance level of 0.05.
Regression Analysis
Multiple linear regression models will be employed to examine the direct and indirect effects of
ICT on labor productivity and working poverty, controlling for potential confounding factors.
The goodness-of-fit of the models will be assessed using R-squared and adjusted R-squared. The
statistical significance of the regression coefficients will be evaluated using t-tests or p-values,
with a significance level of 0.05.
Binary Choice Models

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National Aviation Collage Proposal

Logistic regression will be used to model the binary outcome of working poverty status (1 if the
household is below the poverty line, 0 otherwise). The regression coefficients will be interpreted
in terms of the impact of ICT and other factors on the probability of being in working poverty.
Marginal effects will be computed to quantify the magnitude of the effects on the probability.

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National Aviation Collage Proposal

References
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Addis Ababa - Wikipedia https://en.wikipedia.org/wiki/Addis_Ababa

Addis Ababa - Simple English Wikipedia, the free encyclopedia
https://simple.wikipedia.org/wiki/Addis_Ababa
History and features of Addis Ababa | Britannica https://www.britannica.com/summary/Addis-
Ababa
Addis Ababa – Travel guide at Wikivoyage https://en.wikivoyage.org/wiki/Addis_Ababa
Addis Ababa - Brilliant Ethiopia https://www.brilliant-ethiopia.com/regions/addis-ababa

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