for African standards - but also a distribution of health workers that is biased towards urban areas.<sup>8</sup> Health workers in Ethiopia face a labor market with specific characteristics. Most important is the central role of the government. Wages are set by policy makers and therefore may not reflect the market value of labor. The government also plays a direct role in the allocation of health workers.<sup>9</sup> Students who have been funded by the government – which is the vast majority - have an obligation to serve time working for the funding government agency (regional or federal) and are randomly allocated to posts through a lottery, with those funded by a regional government allocated to a post in that region.<sup>10</sup> Although the allocated job cannot be changed in principle, we find evidence that students bend the rules.<sup>11</sup> Only after having served the obligatory term in a government facility can health workers receive a release certificate from the public sector. This certificate is legally required to work in the private health sector. Private facilities at the clinic level are now common place, but only in urban areas. In general, the Ethiopian health sector is dominated by the public sector - except for the pharmacies and drug shops.<sup>12</sup> Our analysis is based on a survey with final year nursing and medical students in their last year of study. The sample includes 219 nursing and 90 medical students, sampled from eight clinical nursing schools and three medical faculties all over the country.<sup>13</sup> The nursing students were in the final year of their training while the medical students were about to enter their internship. Our sample of medical students represents 49% of the 2003/4 cohort, while our sample of nursing students represents an estimated 16% of the 2003/4 cohort. The statistical analysis is based on data from three sources: (i) a self-administered (supervised) questionnaire which included contingent valuation questions; (ii) a medical knowledge test; and, (iii) data from two behavioral games.<sup>14</sup> As set out in the introduction, two major challenges are to measure the willingness to work

> 8 There are no detailed figures available for the urban – rural distribution, but from partial analysis it is clear that the distribution is biased in favour of urban areas . Data from the survey used in this paper suggests indeed that 67% of nursing students and 92% of doctors prefer to work in an urban area in the long term. In the context of Ethiopia this implies a strong preference for Addis Ababa.

> 9 The role of the public sector, both for wage setting and in the allocation of health workers also motivate the use contingent valuation in the Ethiopian context.

10 Students from private schools formally do not have an obligation. But private for profit schools are a very new phenomon (Only one school is listed to transfer from pre-accredition to full license; the school is part of ths sample- all the others remain pre-accredited), and students from non-profit schools often partcipate in the lottery.

11 Close to sixty percent state that they can get their first posting changed; about seventy percent will swap their posting, and over twenty percent would consider to pay for a swap. None of these activities are legal. 12 Seventy-one percent of hospitals, 94 % of health centers, 82 % percent of health stations and all health posts are currently run by the government. In contrast 80% of pharmacies, drug shops and rural drug vendors are privately owned.

13Details on the sampling strategy are provided in the appendix. We focus on clinical nurses and midwifes who attended 2 years of nursing school.

14 Detailed information on the survey and the survey instruments can be found in Serneels et al (2005).

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