This paper analyzed under-skilling across formal enterprises within Kenya’s services and manufacturing sectors. The objective was to analyze the effect of under-skilling across related enterprises on under-skilling among focal enterprises. This paper utilized the 2016 STEP survey dataset comprising of 504 enterprise-level observations. The technique of ordinary least squares estimation was employed alongside negative binomial regression, while controlling for heterogeneity via incorporation of interaction terms. Empirical findings suggest that under-skilling in Kenya is quite high with 68% of enterprises having attracted an under-skilled job-seeker. These enterprises belonged to groups with a larger share of enterprises attracting under-skilled job-seekers, or with a larger number of vacant occupational positions attracting under-skilled applicants. Model estimation suggested that enterprises were less likely to attract under-skilled applicants as the number of vacant occupational positions with under-skilled applicants rose among peers. These findings further suggested that the number of vacant occupational positions with under-skilled applicants declined as either the share of peer enterprises with under-skilled applicants rose or the number of vacant occupational positions with under-skilled applicants rose among peers. This study concludes that enterprises in Kenya are less likely to attract under-skilled applicants when peers have more incidences of under-skilled job seekers. Furthermore, that enterprises have fewer vacant occupational positions with under-skilled applicants when either the share of peers with under-skilled applicants rises or the average number of vacant occupational positions with under-skilled applicants rises among peers.
Social Connections and Skills Gap in Kenya
- Kefa Simiyu
- Beatrice Mbinya
- Peter Karisa