Structural determinants of unemployment in Uganda

Abstract

This study examined the determinants of unemployment in Uganda, focusing on the roles of agricultural, industrial, and service sector employment, alongside macroeconomic and demographic factors. Using an autoregressive distributed lag (ARDL) approach to account for mixed integration orders among variables and testing for both the long and short-run relationship between the variables, the analysis revealed that sectoral employment patterns shape unemployment dynamics in distinct ways over time. Agricultural employment temporarily reduces unemployment in the short term but exhibits diminished positive effects over the long term. Industrial sector growth initially raises unemployment, but eventually contributes to job creation as economies of scale and complementary sectors emerge. Similarly, service sector expansion shows delayed benefits, with short-term unemployment pressures preceding gradual improvements. Population growth emerged as a persistent driver of unemployment. While macroeconomic factors like inflation and GDP growth demonstrate limited direct impacts, the findings highlight broader structural challenges, including the need for balanced industrialization, demographic management, and sectoral modernization. The study emphasizes targeted policy interventions to enhance agricultural productivity, promote labour-intensive industrial growth, and strengthen high-employment service subsectors such as tourism and ICT. Addressing Uganda’s unemployment crisis requires integrated strategies that bridge short-term labour absorption with long-term economic transformation, prioritizing inclusive growth and stability. Subject keywords; Structural determinants, Uganda, Unemployment,