LABOR PRODUCTIVITY AND INCLUSIVE GROWTH IN SUB-SAHARAN AFRICA: EMPIRICAL EVIDENCE

This study explores the relationship between labor productivity and inclusive growth in 32 SSA countries. The panel system GMM approach is used with the panel dataset for the period 1999 to 2021 to estimate the effect of labor productivity on inclusive growth. The study found that labor productivity negatively impacts inclusive growth through income inequality. The results further indicate that labor productivity positively impacts GDP per capita and employment but negatively affects income equality. This means that higher labor productivity leads to increased GDP per capita and creates more employment opportunities, albeit with potential implications for income equality. However, the negative influence on income equality shows that the benefits of increased productivity have not been distributed evenly among the region’s population. This disparity in income distribution widens the wealth gap and hinders inclusive growth. Thus, policymakers must consider implementing policies that promote education, training, and other social programs to reduce income inequality and promote inclusive growth