The labor market in Kenya : recent evidence

In this paper the Kenyan labor force and employment at around 1980 are examined. Then the author examines the main changes that have taken place since 1965 regarding labor supply and demand, discussing also the problem of the functioning of the labor market in the country. In connection with this the author analyzes the reasons why the agricultural labor market in Kenya does not perform a good allocative function. At the same time, the behavior of the formal sector of the labor market is also examined with particular regard to the effects of government policies. There are two major themes that arise from this paper. The first is that the labor market does provide an allocative job in urban Kenya, which would demand a policy of noninterference. The second is that, in contrast, rural labor markets do no allocate labor well, and here the remedy lies outside labor market policy. The remedy lies rather in straightening out capital market imperfections.