What is the relationship between youth unemployment and political instability? This working paper explores how youth unemployment is associated with political violence and armed conflict in developing countries. It suggests that youth unemployment is a symptom rather than a cause of political instability; there is a positive effect of youth unemployment on political violence but this relationship is not robust.
The paper is based on empirical data on political instability and unemployment data from 40 developing countries between 1991 to 2009. Data are principally drawn from the seventh edition of the Key Indicators of the Labor Market (KILM) and the Center for Systemic Peace (CSP) databases. The identification approach resorts mainly on maximum likelihood method. It tests 3 hypotheses: (1) youth unemployment has significant effects on increased risk of political instability; (2) the relationship between unemployment rate and political instability is conditional upon the education levels of the youth; (3) whether youth unemployment can lead to series of anti-government demonstrations rather than global instability.
- Youth unemployment is associated with political violence and armed conflict in developing countries. However the level of education lowers the magnitude of the effect. Countries with high educated people are less prone to political violence. The opportunity cost for an unemployed young person with low levels of education to be involved in a rebellion or a riot is too high is lower than for an unemployed young person with higher levels of education.
- There is a positive effect of inequality on political violence. Tensions among youth because of inequalities can lead to the outbreak of conflict. In general, countries with good economic outcomes have a lower risk of armed conflict outbreak. The effect of democratic institutions is weak,democracy does not necessarily imply stability.
- The role of youth unemployment on the occurrence of coups d’état is clear but weak. Instability as a result of high rates of youth unemployment does not aim to change the political regime but can lead to anti-government demonstrations.
- GDP growth, inequality and inflation are determinants of political instability and unemployment. By itself, unemployment cannot explain the occurrence of political violence and armed conflict.
The paper has one policy recommendation: to avoid instability and violence, the focus should be on monitoring economic opportunities for young people, and particularly on providing employment or educational opportunities for youth in periods of economic decline. However, it recognises the complexity of political instability and suggests that future research should address the interpenetration of economic and geopolitical interests in explaining political instability in developing countries.