Income inequality: a recipe for youth unemployment in Africa

Youth unemployment is a problem in Africa such that young people face almost double the unemployment rate as adults. With the booming population on the rise, youth unemployment can turn into a major catastrophe in the continent if not addressed. This study presents empirical evidence on how income inequality accelerates the problem. The study uses panel data from 42 African countries spanning 29 years from 1991 to 2020. The dependent variable is youth unemployment, and the independent variable is income inequality. The control variables are gross domestic product (GDP) per capita, population growth, political stability, foreign direct investment, gross capital formation, and political stability. The study employs the Generalized Method of Moment (GMM) model for estimations. The results imply that income inequality positively impacts African youth unemployment, which varies across different income levels. Therefore, measures must be formulated to combat income inequality, such as increasing productivity among small-scale farmers, robust social protection programs, minimum wages, and better access to financial services for young people on the continent.