Employment-Growth Nexus within the East African States

Abstract

This paper examines the causal link between economic growth and employment growth in the three traditional East African countries. Time series quarterly data for the period 2001-2018 are used to study the underlying linkage. The study employs the ARDL bounds testing approach to cointegration to estimate the short run and the long run national employment elasticities of economic growth. Estimates show that there is no long run causal link between economic growth and employment growth for Uganda and Tanzania, but there is a long run causal link between the two variables for Kenya. Estimates further show that there is no short run causal link between economic growth and employment growth for Uganda and Kenya but there is a short run causal link between the two variables for Tanzania. In all countries, estimates indicate that the employment intensity of economic growth is less than unity suggesting that the economic growth in the three traditional East African countries has not been employment intensive. The study results provide empirical evidence of the inability of economy expansion of the East African economies to create substantial opportunities for employment for the East African labour force. Results suggest that East African governments need to design policies and implement projects and programs that are pro-poor and are growth inclusive in order for the economy expansion to create more opportunities for job creation.