Socioeconomic Determinants of Poverty Levels in Kenya: Evidence from the Structural Drivers of Development and Inequality

Abstract

This study examined the socioeconomic determinants of poverty levels in Kenya using annual time-series data for 1990-2024. Poverty was measured using the poverty headcount ratio at the international poverty line of $2.15 a day in 2017 purchasing power parity. The analysis focused on financial access, secondary school enrolment, public health expenditure and income inequality as structural explanatory variables. An explanatory research design was adopted and an autoregressive distributed lag model was estimated after descriptive and diagnostic analyses. The selected specification used 33 observations after lag adjustment and followed an ARDL(2,1,1,1,1) structure. The findings showed that financial access had a negative and statistically significant association with poverty, suggesting that wider access to formal finance can support poverty reduction where financial services are inclusive and productive. Public health expenditure also had a negative and significant association with poverty, indicating that health investment can protect households from illness-related deprivation and improve human capital productivity. Income inequality had a positive and significant association with poverty, confirming the importance of distributional conditions in poverty outcomes. Secondary school enrolment had a positive and significant coefficient, suggesting that enrolment expansion alone may not reduce poverty where education quality, labour-market relevance and employment absorption remain weak. The study concludes that poverty reduction in Kenya requires coordinated policies that combine inclusive finance, effective health investment, education quality improvement and inequality reduction. The results are interpreted as econometric associations rather than definitive proof of causality.