Analysis of the impact of microfinance on youth employment in Senegal

Abstract

This study analyzes the impact of microfinance on youth employment in Senegal over the 2010-2023 period. Previous studies conducted in Senegal generally rely on individual surveys or program-level evaluations, leaving the regional and dynamic dimensions of the relationship between microfinance and youth employment less documented. This article contributes by examining this relationship using a regional panel covering the 14 administrative regions of Senegal, with a fixed-effects model as the main specification and a dynamic GMM model as a robustness analysis. The fixed-effects estimates show a positive and statistically significant association between microfinance and youth employment (coefficient 0.118; p < 0.01). Human capital has a larger positive coefficient (0.264; p < 0.01), while regional GDP and urbanization are positively associated with youth employment and the informal sector share is negatively associated with it. The findings suggest that microfinance is more effective when combined with skills development and a favorable economic environment. Policy implications therefore emphasize the integration of credit, training, entrepreneurial support and gradual formalization of financed activities.

JEL Classification : J21, G21, O17, C33.

Paper type : Empirical Research