Abstract
ABSTRACTSub-Sahara Africa has over the years been exposed to diverse arguments and agitations about the provision of employment to alleviate poverty in the sub region with the aim of achieving full employment. Whereas some economists and bibliographers believe of the significant impact that employment and unemployment have on annual percentage change in GDP growth, some do not. The main objective of the study is to access the impact that employment and unemployment have on annual percentage change in GDP growth in Sub-Saharan African countries. World Development Indicator (WDI) data was collected from the World Bank from the year 2000 to 2014 for the purpose of the study. A sample of 12 sub-Saharan African countries were randomly selected using a random number generator and variables taken. Two statistical models were used; the Pooled Ordinary Least Square (OLS) regression model and the Least Square Dummy Variable (LSDV) regression model with fixed effect was used to empirically access impact that employment and unemployment have on annual percentage change in GDP growth. Both the Pooled Ordinary Least Square regression model and the Least Square Dummy Variable regression model tested to be statistically significant but LSDV regression model explained a greater percentage of the variability of the model than the Pooled OLS for employment on GDP growth rate. The pooled OLS regression model was not statistically significant at 5% level of significance in assessing the impact that unemployment has on annual percentage change in GDP growth. Further empirical analysis of the study also revealed a positive relationship between annual percentage change in GDP growth and employment for the female population (Empl15+Female), employment rate for the male population (Empl15+Male) and employment rate for the Total Youth population (Empl15-24 total). Also, an inverse relationship existed between unemployment male youth population (15-24years), and female youth population (15-24years) on annual percentage change in GDP growth. The study can be improved by considering other factors that impact GDP growth other than employment and unemployment.Keywords: Employment, Unemployment, GDP growth rate, Pooled OLS, LSDV
Highlights
Sub-Saharan Africa has over the years experienced series of challenges regarding employment provisions for the youth of working class as well as the entire population in general which has had a massive impact on the rate of growth of the region’s Gross Domestic Product (GDP)
This study investigated the relationship between employment and unemployment on annual percentage change in GDP growth for the youth and the entire population in general
Two statistical models were used in the analysis; the Pooled Ordinary Least Square (OLS) regression model and the Least Square Dummy Variable (LSDV) Regression model with fixed effect was used to empirically access impact that employment and unemployment has on annual percentage change in GDP growth
Summary
Sub-Saharan Africa has over the years experienced series of challenges regarding employment provisions for the youth of working class as well as the entire population in general which has had a massive impact on the rate of growth of the region’s Gross Domestic Product (GDP). Whereas many factors contribute to the development of a country, this study looks at employment and unemployment among the other factors and its contribution to annual percentage change in GDP growth rate. Employment and unemployment in Sub Sahara African countries compared to other regions of the world seems to be the root cause of poverty in the region. Lower level of employment and higher unemployment rate perpetually reduces Gross Domestic Product (GDP) thereby reducing economic growth and having a significant fall in the standard of living of individuals
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