Influence of Governance Quality on Youth Unemployment in Kenya: Institutional Growth Theory

Youth unemployment remains a major socio-economic challenge in Kenya, despite sustained economic growth and various employment interventions. This study examines the determinants of youth unemployment in Kenya using institutional growth theory, focusing on the role of governance quality, particularly control of corruption and rule of law. The study employed annual time-series data covering 1996–2024 and applied the Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run relationships. The findings reveal a long-run equilibrium relationship between institutional factors and youth unemployment, with the bounds test confirming cointegration. Control of corruption has a negative and statistically significant effect on youth unemployment, indicating that improved governance and reduced corruption enhance employment opportunities for young people. However, the rule of law had an insignificant effect, suggesting that legal reforms alone may not automatically translate into improved youth employment outcomes. The study concludes that strengthening institutional quality, promoting transparent resource allocation, and improving governance effectiveness are essential for reducing persistent youth unemployment in Kenya. The findings highlight the need for integrated employment strategies that combine institutional reforms with investments in skills development, innovation, and labor-intensive economic activities.