By international standards, health workers in Ethiopia are in short supply. In addition, those who do enter the health fields and remain in the country disproportionately live and work in the capital, Addis Ababa. This paper uses detailed data gathered from nearly 1,000 health workers to examine the incentives and constraints that health workers face when choosing where to work, the likely responses of workers to alternative incentive packages, and the longer term performance of the health worker labour market. This working paper was produced as part of the World Bank's Africa Region Health Systems for Outcomes (HSO) Program. The Programme funded by the World Bank, the Government of Norway, the Government of the United Kingdom and the Global Alliance for Vaccines and Immunization (GAVI), focuses on strengthening health systems in Africa to reach the poor and achieve tangible results related to Health, Nutrition and Population. The main pillars and focus of the program center on knowledge and capacity building related to Human Resources for Health, Health Financing, Pharmaceuticals, Governance and Service Delivery, and Infrastructure and ICT.