Abstract:
The study investigates whether policies, both regional and country-specific,
should mainly focus on accelerating economic growth in the region to reduce
youth unemployment in the SADC region. In this endeavour, the study is
based on Okun’s law which prescribes that unemployment rates should
generally begin to fall when economic growth rates rise above the economy’s
potential. The study uses panel data for selected SADC countries whose
annual youth unemployment rate is above the region’s average annual rate of
20%. Upon performing a variety of panel model mis-specification tests, the
systems GMM model was chosen as the suitable model. Our findings support
Okun’s proposition of a negative relationship between changes in economic
growth and changes in unemployment rates. Our model predicts a 9.85
percent reduction in youth unemployment for every one-point increase above
the region’s GDP growth rate.
