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Corresponding Author:
Mercy T. Musakwa, Department of Economics, University of South Africa, Pretoria, South Africa

Impact of Income Inequality on Youth Unemployment in South Africa

April 15, 2026
JEL classification: C22; D31; E24
Keywords: Income Inequality; Youth; Unemployment; Autoregressive Distributed Lag (ARDL); South Africa

Abstract

The impact of income inequality on youth unemployment is investigated for South Africa using annual time series data from 1990 to 2022. The study was motivated by the need to find out if income inequality plays a role in driving youth unemployment that is above 50% from 2012 (World Bank, 2024). High youth unemployment is more worrying since it is the most productive age group that should actively participate in the economy through provision of labour. Thus, high unemployment levels mean South Africa is losing labour hours that could contribute to economic growth. The main objective of this study is to establish the impact of income inequality on youth unemployment in South Africa. Employing ARDL approach, the study found a positive relationship between youth unemployment and income inequality, irrespective of the timeframe. It can be concluded from this study that; income inequality is robbing South Africa youth’s contribution to economic growth and requires urgent attention. Government needs to put in place policies that do not only address the symptoms – short term policies, but also those that address the root cause of youth unemployment in the medium to long term.

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Impact of Income Inequality on Youth Unemployment in South Africa

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce