The Effect of Covid-19 on Unemployment and Price Changes in Ethiopia: Evidence from Woldia Town “Does The Downward Sloping Philips Curve Hold True at Micro Level”

The massive spread of corona creates pressure on the general systems of the world countries. As stated in some studies corona virus affect every institution and individuals of the world in many aspects. Specifically it results in high unemployment, low level of production and significance rise in the nominal price of commodities. This study tries to explain the change in those economic variables to analyze the effect of Covid-19 on the living standard of households in Woldia town, Amhara regional state of Ethiopia using a data obtained from the north wollo zone planning commission which had been collected from sampled individuals monthly. Since the issue is so recent and absence of many conducted researches on this area, this article have no specific chapter for review of literature and gives more focus for data analysis part. Then descriptive analysis indicates the presence of valuable rise in unemployment and average price levels simultaneously and the OLS regression result disproved the applicability of Philips curve for the study area under the influence of COVID-19.

February and end March (WB, 2020.) Once discovered from china, the massive expansion of Corona virus affects the living standard of citizens in all countries of the world and obliged to change their social, political, economic cultural habits through applying some levels of social distancing measures. Ethiopia as one member of African nations some predictions suggest that Covid-19 will have 2.9 percentage points off the 2020 fiscal year's economic process in Ethiopia even though estimations global estimation suggest that world economy could lose $2.7 trillion with this crisis, an amount comparable to the full GDP of UK Projections. In our country Ethiopia this pandemic expansion leads to large number of unemployment when majority of big factories, industrial parks, and service giving organizations became shutdown because of the curfew applied in the country at least for 6 months. Earlier to this study, the international labor organization has predicted that the world unemployment to be raised from low to high stage with estimated number of between 5.3 and 24.7 million (Alemayehu, 2020).
Apart from such gloomy picture of growth in 2019/20, the Ethiopian economy is additionally characterized by significant macroeconomic instability and precarious prices and high levels of unemployment (and hence exchange problem) condition even before the onset of the economic effect of COVID-19. Just to mentions a number of these in figures: general inflation is currently 23 percent, while food inflation being 26 percent; the Birr is devalued by the government significantly from about 32 percent a pair of weeks ago to about 34.34 (more than 7 percent) now; the government debt (without including recent pledges by the donors, which is significant) as percentage of GDP is above 55 percent; the export-import gap remained significant because we are importing quite 5 times our exports which is simply below $3 billion once a year. The government also predicted that about 30 million (half of this thanks to COVID effect) people may be food insecure and wish help this year alone. Thus, it's within the context of such precarious condition that the pandemic is hitting the country's economy (Kibrom, 2020).
Ethiopia has recorded strong economic performance over the preceding years, as reflected by the common real GDP rate of about 10% once a year. The expansion was expected to sustain a minimum of for the short term, as long as the favorable conditions still support it. Nevertheless, recent reports from both local and international institutions reveals that the past growth remained an unlikely situation thanks to the pandemic affecting several segments of the economy. As per the recent country report of the IMF economy growth will significantly diminish (IMF Report, 2020). This report identified two critical effects of the pandemic are underscored: deterioration of prices specifically to be increased more than double and high number of unemployment because of stay at home orders declared by government of nations. Because of the low regulatory protection, the illfunctioning economy and therefore to population scenarios that sustained for over twenty years became more Sevier. So this became a reason for many researches to be conducted around the world to identify the effect of the corona virus on different countries' economies. However, like other business undertakings and economy wide scenario, the world contains a higher chance to be suffering from the COVID 19 unless timely remedial measures are in-placed. This can be because African nations naturally may be a fragile undertaking which is probably going to be littered with the performance of the economy still because the wellbeing their citizens (Tesfaye, 2020).
As stated in the studies corona virus affect every institution and individuals of the world in many aspects. Specifically it results in high unemployment, low level of production and significance rise in the nominal price of commodities. This study tries to explain the change in those economic variables to analyze the effect of Covid-19 on the living standard of households in Woldia town, Amhara regional state of Ethiopia using a data obtained from the north wollo zone planning commission which had been collected from sampled individuals monthly. Since the issue is so recent and absence of many conducted researches on this area, this article have no specific chapter for review of literature and gives more focus for data analysis part.
North Wollo zone administration. Then after obtaining the data methodologically more emphasis is given for descriptive method of analysis. The tabular and graphical presentations are applied to observe the change in unemployment and prices of commodities. In addition to those descriptive methods, econometric model specifically simple linear regression had been applied to see the relationship between unemployment and price level as a test or the applicability of downward sloping Philips curve which states the inverse relationship between those two economic variables. There is a need to test this hypothesis since such relationship between inflation and unemployment raise the idea of policy trade off. The Phillips curve rapidly becomes a cornerstone of macroeconomic policy analysis. It suggested that policymakers could choose different combinations of unemployment and inflation rates. That is we could have low unemployment as long as we put up with high inflation. The policy measures to reduce unemployment always lead to higher inflation rate and policy measures which reduce inflation rate always contribute to higher unemployment.

Data Analysis 3.1. Descriptive Analysis A. Unemployment status of Woldia Town under Covid-19
Under this part of the study, descriptive summery is more applied to investigate about by what amount the level of unemployment and price have been changed starting from the coming of corona virus until the end of September. So graphical method specifically pied chart is used to observe the recent unemployed individuals to be either from either from public sector, privates sector or self-employment conditions. And the tabular presentation is also applied to show how price level of goods and services had been rise during the time of COVID-19. With this regard the following The table presented above indicates that majority of unemployment arises from service sector since almost all activities in hotels, restaurants, game zones, and tourism offices seized their normal functioning because of quarantine declared by the government. Additionally those individuals who had been unemployed from the public sector are for temporal time since there is no customer to be served because of the stay at home command. Again as we can see from the pie chart presented above, the highest proportion of unemployment is arisen from the private sector since the greedy nature of company owners obliged them to fire many of their workers without any compromises and the inability of the government to share the internationally organization financed money for the owner of private companies. Then this high unemployment increment leads to the fail of 4 production in every sector and creates shortage of good and service demanded by the society. Then because of this rise in demand in relation to supply shortage and consumers future expectation on availability of commodities, the average price level of the town increased at very significant level. In addition to this, individuals who engaged in self-employment like electronic shops, street vending and petty traders and any consultancy providing individual became obliged to go back to their rural hometown for the sake of sustaining their life.

B. Rise in Prices of Commodities in Woldia Town I. Average prices of selected fruits and vegetables before and after Covid-19
Before  Table 2

: Average price of fruits and vegetables
Individuals are suffering a lot from the effect of the corona virus since the average price of those commodities is rising by more than half. This indicates that dwellers of the town are acting a difficulty of having access to one of the basic needs called food. Since fruits are more important for the healthy functioning our body peoples in this area are said to be incurring the nutrients obtained from fruits and may be faced health distortion when lacking the required vitamins.  Table 3

: Average transportation tariff
What we can understand from the above is that individuals of this compound are obliged to pay more than 83% of the tariff they were paying before the occurrence of the corona virus. This rise in tariff has two implications as an additional challenge for the people. The first one is that individuals involved in petty trades are paying higher amount of transportation cost costs which will minimize the profit level of their exchange and indirectly forced them to increase the price of the commodity they are selling. Secondly, this rise in tariff leaved a restriction on every individual not to travel from place to place even for necessary condition like for getting medication from Hospitals, other religious and social aspects. The rise in price of cereal crops is low when compared with the change in price o fruits and transportation costs. But still the change is very high since cereal crops are the most important determents of Ethiopian citizens either to fulfill their demand for food or not and their lively hood of to obtain sufficient food or being starved is highly influenced by those commodities. So we can say that peoples who live in Woldia town are highly suffering this rise in price of cereals resulted because of the occurrence of Corona virus.

Econometric Analysis
Under this section regression will be conducted to test either the theory Philips curve is applicable or not. Theoretically, this curve is explanation for the presence of inverse relationship between the level of price and unemployment and concludes that that the two economic variables can't simultaneously move in the same direction. But realistic facts on ground under the COVID-19 period indicates that there is high unemployment level because of quarantine and this may leads to low production and thereby high demand for necessity goods with low supply which indirectly leads to rise in average price level.
So, to see the existed relationship between unemployment and price level simple linear regression is specified by letting unemployment the independent variable to affect the average price level in woldia town as measured by consumer price index.  . reg cpi unemploy The post estimation tests have been cheeked and no problem of hetroskedastisity (failed to reject the null hypothesis of constant variance with a p-value of 0.42) and multicollinearity (with average vif of 8.5) but faces normality problem and robusted regression is applied to capture the effect of this violation in the model. From the regression result estimated using OLS technique of estimation the R 2 value is given to be 0.532 to indicate that out of the total change in price, about 53% is explained by the change in unemployment resulted from quarantine command under corona virus period. This agrees with the previous idea since high unemployment can lead to low production and hence demand pull inflation.
The level of unemployment has significant impact on the rise in price since the t-value for unemployment is greater than two (which is 2.36) .This implies that a unit increment in unemployment results in a rise in average price level by 0.0014 amount. From this we can understand that, under the period of COVID-19, there is simultaneous rise of unemployment and average price level and the central assumption of Philips curve is not applicable at least for the study area under consideration.

Conclusion
Coronavirus can be considered as a respiratory disorder spreads from person to person. It had been caused by the SARS-CoV-2 virus and it belongs to the identical family of coronaviruses that caused the Severe Acute Respiratory Syndrome outbreak in 2003 and therefore the Middle East Respiratory Syndrome outbreak in 2012. This pandemic was triggered in in early January 2019 in Wuhan city in Hubei province of People's Republic of China. While it emerged from animal hosts, currently COVID-19 continues to spread across the globe through human-to-human contact. It resulted in many socio economy impacts on the world society and deteriorates their day to day activities. Unemployment is the major manifestation of COVID-19 due quarantine requirement designed to control the spread of the virus and this indirectly creates high level of increments in the average price of consumer necessity goods. As per the descriptive and econometric analysis of this study there is high unemployment and rise in average price at a time opposed to the assumption of Philips curve.