Abstract
This study examines the threshold dynamics in the relationship between economic growth and unemployment in Sub-Saharan Africa (SSA), focusing on inflation and foreign direct investment (FDI) as threshold variables. Traditional linear interpretations of Okun's Law frequently neglect macroeconomic difficulties in developing nations, which motivates the use of a nonlinear paradigm. Using panel data from 32 SSA nations from 2010 to 2023, the study analyses unemployment as a dynamic process impacted by endogenous regressors. This study uses a Dynamic Panel Threshold Regression framework to capture nonlinearities, factor in unemployment persistence, and combat endogeneity through lagged structures. The Hansen-type estimate is used to identify inflation and FDI thresholds, which are then supported by typical panel diagnostics. Fixed-effects models with Driscoll-Kraay standard errors and extra controls assure robustness, as does regime-specific analysis across SSA income categories. The findings suggest that the potential of economic growth to eliminate unemployment in SSA is critically dependent on keeping inflation and FDI below their specified thresholds. When these criteria are met, growth turns increasingly labour-intensive, especially in low-income nations. However, excessive inflation or capital-intensive FDI reduces employment creation, emphasizing the importance of macroeconomic stability, strategic investment policies, and strengthened domestic productive capacity in promoting job-rich growth across the region. The study indicates that economic development alone is insufficient to provide broad-based employment in SSA without accompanying reforms that stabilize inflation, redirect foreign direct investment into labour-intensive industries, and tailor employment policies to country-specific economic conditions.