An Empirical Study on Impact of Labour Productivity, Dependency Ratio on Working Poverty in Sub Saharan African Countries (SSA): An Auto Regressive Distributed Lag (ARDL) Model Approach

Abstract

Following the global shock in late 2019 resulting from the Novel Covid-19, the overwhelming effect on the global economy cannot be over-emphasized. Hence SSA economies must strategize to reduce the surge impact on poverty. This study seeks to empirically investigate the impact of labour productivity, dependency ratio poverty on aged 0-25 and working poverty aged 25 years and above. This study employed the heterogeneous panel data comprising of (38) sampled countries for the period 2008 to 2020. Applying the Autoregressive Distributed Lag Model, the result of the study revealed that coefficient poverty aged 0 to 25 had a positive and statistical significant impact on working poverty aged 25 years above at one percent level of significance indicating that there is a long run relationship. This also shows that a long run causality relationship exists. Labour productivity depicts a positive effect on working poverty although not statistically significant indicating no long run causality effect. The parameter dependency ratio revealed a negative and statistical significant impact on working poverty in the long run at one percent level of significance indicating a long run causality effect. The ECM indicates a joint influence of all explanatory variables on the dependent variable on working poverty. It explains the long run convergence to equilibrium at the speed of 16%. On short run relationship, that there exist a positive and short run causality effect between working poverty aged 0 to 25 and working poverty aged 25 years and above. However, there is no any other short run causality relationship among remaining series.