Does Intra‐African Trade Reduce Youth Unemployment in Africa?

Abstract

AbstractThis study empirically estimates the effect of Africa's intra‐regional trade on the burgeoning youth unemployment in the continent. This is necessary since very few studies have been undertaken in the particular context of African countries. To the best of our knowledge there are no studies exploring the intra‐African trade–youth unemployment nexus in Africa. We investigate both the aggregate and gender‐specific impacts. Our empirical estimates, using available cross‐sectional time series data over the period 1980 to 2010, suggest that higher levels of intra‐African trade reduce both the aggregate, female and male youth unemployment in Africa. In addition, our results show that domestic investment rate, institutionalized democracy, secondary education, inflation, economic growth, and higher urbanization tend to reduce youth unemployment both on the aggregate and gender‐differentiated and therefore are good for youth unemployment reduction in the continent. On the other hand, higher real per capita GDP and to a lesser extent credit to the private sector have a significant positive effect on youth unemployment in Africa. Government consumption expenditure and foreign direct investment have an insignificant effect on both the aggregate level and the gendered level of youth unemployment in Africa. Based on these results, some policy recommendations are proffered.