Abstract:
The objective of this study is to estimate the determinants of unemployment in the
Southern African Development Community (SADC) region using annual data from
2000 to 2016. Given the characteristic of the data, the study adopts Fixed Effect (FE)
estimation technique. For further analysis, the study also estimated the ARDL panel
model to capture persistence effect of unemployment in the region. The FE results
reveals that real GDP, foreign direct investment, consumer price index, credit to the
private sector and interest rate are negatively related to unemployment. While trade
openness, labour productivity and population have a positive sign. The results estimated
with ARDL model are not very different from those of FE model, but we obtained a
noticeably smaller estimates for ARDL model. Variables which have negative association
with unemployment suggest that they are likely to reduce unemployment. Therefore,
such indicators may be of interest to policy makers when formulating unemployment
reduction strategies. In terms of policy advise, the study recommends the government
of SADC member states to encourage the education system that can equip leaners with
entrepreneurial skills and in-job practical skills, in order to promote high success rate of
SMMEs as well as to provide skills needed in the labour market. It also recommended
enforcement of free trade of goods and services in the region as a means of making
the industrial sector an engine of economic growth in order to create much needed
employment.
