Urban poverty and labour force participation in Kenya

Abstract

Recent estimates show that urban poverty in Kenya has increased tremendously. For the urban poor, whose main income generating asset is labour, participation in the labour market is crucial. Employment enables the urban poor to earn income to finance basic needs including food, shelter and other requirements. However, whether participation in the labour market is important for poverty reduction depends on the level of labour income earned. The income in turn depends on the level of education, occupation and the sector of employment. This paper examines the relationship between urban poverty and labour force participation in Kenya. The issue is whether participation in the labour market is important for poverty. The analysis is based on data from various Welfare Monitoring Survey by the Central Bureau of Statistics (CBS). The results show strong links between poverty and labour force participation inviting immediate policy intervention for poverty reduction through the labour market. Urban poverty and labour force participation are strongly related because labour earning is the main source of income for urban poor. However, participation in the labour market does not keep households out of poverty: the working urban poor in Kenya account for well over half of the total urban poor. The results also show that the probability of being poor in certain occupations and sectors is higher than others..