South African unemployment and economic growth: A disaggregated analysis by education attainment

This study examines the correlation between unemployment and economic growth in South Africa through a disaggregated analysis focused on educational attainment. Grounded in the Solow growth model and human capital theory, the research utilises annual time-series data from 1994 to 2022, obtained from the World Bank Indicators. Economic growth is represented by GDP growth, labour is indicated by unemployment rates categorised by advanced, intermediate, and basic education levels, and capital is measured by gross fixed capital creation. The Autoregressive Distributed Lag (ARDL) framework is utilised after conducting unit root and bounds tests, which validate the existence of long-run cointegration. The findings reveal a negative and statistically significant long-term association between economic growth and unemployment for those with basic and intermediate education, but unemployment among those with advanced education shows a negative but minor influence. Investment consistently demonstrates a favourable and substantial effect on growth. The findings emphasise structural unemployment and skills mismatches, highlighting the necessity for enhanced alignment between educational systems and labour market requirements to foster inclusive and sustainable economic growth in South Africa.