Political instability and youths unemployment in sub‐Saharan Africa

• Published date: 01 August 2022
• Author: Benjamin Fomba Kamga,Dieu Ne Dort Talla Fokam,Paul Ningaye
• Date: 01 August 2022
• DOI: http://doi.org/10.1111/rode.12870

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     wileyonlinelibrary.com/journal/rode  Rev Dev Econ. 2022;26:1850–1879.

© 2022 John Wiley & Sons Ltd.

Received: 16 March 2021 

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  Revised: 12 January 2022 

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  Accepted: 23 January 2022

DOI: 10.1111/rode.12870  

REGULAR ARTICLE

Political instability and youths unemployment

in sub- Saharan Africa

BenjaminFomba Kamga1

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Dieu Ne DortTalla Fokam2

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PaulNingaye2

1Faculty of Economics and Management, 

University of Yaoundé 2— Soa, Yaoundé, 

Cameroon

2Faculty of Economics and Management, 

University of Dschang— Cameroon, 

Dschang, Cameroon

Correspondence

Benjamin Fomba Kamga, Faculty of 

Economics and Management, University 

of Yaoundé 2— Soa, Yaoundé, Cameroon.

Email: fomba1@yahoo.fr

Abstract

The main objective of  this study is to  analyze the  effect 

of  political  instability  on  youths  unemployment  in 

sub- Saharan  Africa.  Particular  interest  is  devoted  to 

the channels  through which  political instability affects 

youths  unemployment.  The  empirical  analysis  cov-

ers a  sample of  23  countries for  the period  2000– 2016. 

To better characterize  the  labor  market  framework  in 

sub- Saharan Africa, the empirical analysis incorporates 

the impact of  political  instability  on  youths  underem-

ployment and  labor underutilization. Using  panel data 

techniques, the results show that political instability in-

creases youths unemployment, underemployment,  and 

labor underutilization in sub- Saharan Africa. The main 

transmission channels identified  are  foreign  direct  in-

vestment, domestic investment, gross domestic product, 

government spending, human capital, and labor market 

flexibility.  The  findings  confirm  the  investigated  hy-

pothesis. As the  main policy implication,  policymakers 

in sub- Saharan Africa should resolve political instability 

as a priority toward addressing youths unemployment.

KEYWORDS

conflicts, generalized method of moments, political instability, 

underemployment, unemployment

JEL CLASSIFICATION

E2; E24; E26; J6; J60; O1; O11

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FOMBA KAMGA et al.

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INTRODUCTION

Political instability is a  growing phenomenon that  tends to become  widespread in sub- Saharan 

Africa (Harkness, 2018). Although it  is not  recent  in this  context, its  evolution  is rapid  and is 

caused by many  factors, including ethnic and tribal  tensions, poverty, unemployment, election 

results, longevity  of  some  heads of  state  in  power, and  presence of  extremist  groups that  aim 

to fight  the regime in  some countries  (Adelaja & George,2020; Azeng  & Yogo,2013; Collier  & 

Hoeffler,2004). The genocide in  Rwanda in 1994, postelectoral conflicts  in Côte d'Ivoire, seces-

sion pressures in the northwest and southwest regions  of Cameroon,  crisis in Mali,  conflicts in 

the Central African  Republic, and the violent  aftermath of  controversial elections in  Kenya are 

a few examples.

In recent decades, there has been substantial literature on issues related to the consequences 

of  political  instability. Much  of  this  literature has  focused  on  the  impact of   political instabil-

ity on economic growth (Alesina etal., 1996; Fosu,1992; Jong- A- Pin,2009;  Okafor,2017); firm 

performance (Matta  etal.,2018);  inflation (Aisen  &  Veiga,2006); human  capital  (Fedderke & 

Klitgaard,1998; Klomp & de Haan,2013); and other macroeconomic indicators such as exports, 

private investment, and foreign  direct investment (FDI) (Carmignani, 2003; Fosu,2003). These 

studies  argue  that  political  instability  generates  uncertainty  that  discourages  investors, leads 

to inflation  volatility, and disrupts government  and business  development agendas, which  ad-

versely affect  economic  performance.  The  impact of  political instability on  labor  market  out-

comes remains highly underexplored. Sayre (2010) examines the effect of political instability on 

unemployment and  job reallocation  across sectors  and occupations.  Using data  from the  West 

Bank and Gaza Strip from 1987 to 1995, he shows that  political instability, as measured by cur-

fews and  closures,  makes the  economic  environment uncertain,  leading workers  and  firms to 

make adjustments to protect themselves  from the impact of  this uncertainty. In such  a context, 

some workers are forced to  migrate, while firms direct their  investments to less- risky areas and 

consequently reduce factor demand. Colino (2012) analyzes the impact of reduced uncertainty as 

a consequence of conflict resolution processes on labor demand. Using a case study of the Basque 

Country, the  author finds  that  the number  of  workers  employed by  manufacturing  firms had 

increased significantly when peace talks to end the conflict were undertaken.

This  article  contributes  to  the  debate  on  the  determinants  of  youths  unemployment. 

First, it highlights the effect of  political instability on  youths unemployment by considering 

transmission channels. Although previous studies accept that there  is a positive relationship 

between political  instability  and unemployment,  little  effort has  been  made to  analyze  the 

different channels through which political instability increases the unemployment rate in an 

economy. For example, Sayre (2010) has mainly focused on the deterioration of investment in 

human capital as  a consequence  of political  instability that  can cause long- term unemploy-

ment. However, the perverse effect of political instability can also be transmitted through FDI, 

domestic investment, government spending, gross domestic product (GDP), and  labor mar-

ket flexibility and consequently lead  to an increase in the  youths unemployment rate. These 

variables have been presented in  previous studies as determinants  of youths unemployment 

(Anyanwu,2013;  Baah- Boateng,2013; Choudhry  et al.,2012;  Folawewo &  Adeboje, 2017), 

but this study provides a  new understanding by analyzing them as transmission channels of 

the effect of political instability on youths unemployment. Second, this study is relevant with 

regard to real options theory, which states that uncertainty causes firms to postpone or aban-

don production and investment (Coy,1999; Dixit & Pindyck,2012; Driver & Moreton,1991). 

Therefore, under  uncertainty,  firms experience  a  decline  in  the  demand for  labor  (Bloom,