Determinants of Youth Unemployment in Kenya: Exogenous Growth Theory

Youth unemployment remains a major development challenge in Kenya, where rapid growth of the youth labour force has not been matched by sufficient employment creation. This study examined the determinants of youth unemployment in Kenya using the Exogenous Growth Theory framework, focusing on population growth, savings rate, technological progress, capital accumulation and labor force growth. The study employed an annual time-series research design using secondary data covering the period 1991–2024. Data were obtained from the World Development Indicators and analysed using the Autoregressive Distributed Lag (ARDL) model. Pre-estimation tests included descriptive statistics, variance inflation factor (VIF), unit root tests using Augmented Dickey-Fuller and Phillips-Perron approaches, structural break tests and ARDL bounds testing for cointegration. The findings revealed that exogenous growth factors, considered jointly, did not establish a stable long-run relationship with youth unemployment in Kenya. However, labour force growth exhibited a significant short-run effect on youth unemployment, indicating that rapid expansion of the labour supply continues to exert pressure on employment absorption capacity. Population growth, savings rate, technological progress and capital accumulation were found to have no statistically significant short-run effects within the exogenous growth model. The study concludes that factor accumulation and demographic expansion alone are insufficient to address youth unemployment unless supported by complementary mechanisms such as human capital development, productivity enhancement, institutional reforms and labor-absorbing economic transformation. The study recommends policies that align investment, technology adoption, and labour market strategies with youth employment creation to ensure inclusive economic growth.