Drivers of Employment Elasticities in Kenya
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Date
2019-08-31
Authors
Thuku, Gideon Kiguru
Omolo, Jacob
Muniu, Joseph
Journal Title
Journal ISSN
Volume Title
Publisher
IISTE
Abstract
The relationship between output growth and employment elasticities has been of intense debate among many
economists. Though there is no conflict between the two objectives, the question that arises is the rate at which
employment growth responds to economic growth. The policy focus on employment in Kenya is manifested by
the sheer number of employment targeted development plans and Sessional papers that have been formulated.
Basically, all the policy documents developed by the government have premised employment creation on
economic growth. The purpose of the study was therefore to determine the drivers of employment elasticities in
Kenya. Empirical findings indicated that the first lag of employment elasticity, average wage, inflation rate, labour
force participation rate, first and second lags of labour force participation rate, population density, first and second
lags of foreign direct investment to be the short run drivers of employment elasticity. Empirical findings also
indicated that exchange rate, foreign direct investment and population density were the long run drivers of
employment elasticity in Kenya. The study recommends that policy measures to control inflation should be
tightened and more efforts to attract foreign direct investment to be undertaken. The study further recommends
that a stable exchange rate should be maintained. Lastly, the government should harmonize the salary scale
framework to regulate the wages in the country. This could be realized through salary adjustments based on a
periodical and systematic evaluation of wage parameters in the public sector and taking cognizance of the
prevailing economic dynamics
Description
A Research Article in the Journal of Economics and Sustainable Developmen
Keywords
: Employment elasticities, Drivers, Kenya
Citation
Thuku, G. K., Omolo, J. and Muniu, J. (2019), Drivers of Employment Elasticities in Kenya, Journal of Economics and Sustainable Development, Vol.10, No.16