African youth and unemployment: does human capital investment still matter?

ABSTRACT

Graduate unemployment has become a common phenomenon in Africa. Many youth with advanced education levels are not able to find decent jobs. This article examines the effect of human capital investment on youth unemployment using panel data from 44 sub-Saharan countries over the period 1991-2020. The Cross-Sectional augmented Autoregressive Distributed Lag (CS-ARDL) modeling approach is carried out to overcome the issue of endogeneity and cross-sectional dependency. Results show that in the long run, an increase in primary and tertiary school enrolments reduces the youth unemployment rate. In contrast, secondary school enrolment is positively associated with youth unemployment, independently of gender considerations. The short-run dynamics reveal that primary and tertiary school enrolments are positively associated with youth unemployment. In addition, the results confirmed Phillip's curve hypothesis between inflation and unemployment and Okun's law between economic growth and unemployment.

KEYWORDS:

• Education
• youth unemployment
• panel data
• cross-sectional dependency
• Africa

JEL CLASSIFICATION:

• C23
• E24
• I25
• J13 J16

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 In Africa, 40 countries out of 53, representing 78% of the total population, have fertility rates ranging from 4 to nearly 8 children per woman.

2 https://www.jica.go.jp/jica-ri/publication/booksandreports/jrft3q00000029i2-att/TICAD_Africa_2050-Chapter4-v2.pdf

3 Informality can be broadly defined as any deviation from labour contracts, such as avoiding payroll contributions and not conforming to labour law statutes.

4 Educated unemployment arises when a large number of educated people are unemployed or unable to secure a job.

5 Report retrieved from: https://www3.weforum.org/docs/WEF_Global_Human_Capital_Report_2017.pdf.

6 List of selected countries

Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Eswatini, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Namibia, Liberia, Madagascar, Malawi, Mali, Mauritius, Mozambique, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, South Africa, Tanzania, Togo, Uganda, Zambia, Zimbabwe.

7 When$\mathrm{N}<\mathrm{T}$, the Lagrange multiplier (LM) test, developed by Breusch and Pagan (1980) is appropriate for CD checking.

8 The first generation of panel unit root tests is based on the cross-sectional independence assumption.

Additional information

Notes on contributors

Issofou Njifen

Issofou Njifen is a senior economist and author of many articles and books published in classified peer-reviewed journals. He is a lecturer in the Faculty of Economics and Management, University of Yaoundé II, Cameroon.

Chefor Ngwenyi Meungwe

Chefor Ngwenyi Meungwe is a PhD student studying Development and Institutional Economics at the University of Yaounde 2, Soa, Cameroon. She holds a master's degree in Development Economics and a bachelor's in economic and financial engineering. She has co-authored several articles and policy briefs that await publication. Her research interests include thematics related to development economics. She has been a research assistant in many organizations, primarily, the African Development Foundation and the Nkafu Policy Institute.