Urban Exclusion and Gendered Labour Market Penalties: Evidence from Informal Settlements in Kenya's Cities

Urbanisation in sub-Saharan Africa has accelerated at an unprecedented pace, yet physical proximity to economic centres has not translated into labour market inclusion for millions of urban residents. This paper examines how residence in informal settlements shapes gendered labour market outcomes in Kenya's cities using nationally representative data from the 2022 Kenya Demographic and Health Survey (17,618 working-age urban adults) and a multidimensional, UN-Habitat-aligned measure of housing deprivation. Estimating linear probability models with gender interaction terms and city fixed effects, the study documents a persistent "urban exclusion penalty." Women residing in informal settlements are 8.4 percentage points less likely to be employed and 10.6 percentage points less likely to hold formal jobs relative to comparable women in formal neighbourhoods; men face smaller, largely statistically insignificant penalties. Each additional child under five is associated with a 6.8 percentage point employment penalty for women and no corresponding association for men, demonstrating how care burdens compound spatial disadvantage. Paradoxically, men in informal settlements exhibit higher household asset ownership (β = +0.325, p < 0.01), consistent with gendered occupational sorting into settlement-adjacent informal labour markets. These findings challenge the assumption that urban proximity guarantees economic inclusion and reveal informal settlement residence as a structure of gendered economic exclusion, not a transitional housing condition. Effective policy responses require integrated, gender-responsive frameworks combining livelihood infrastructure, publicly subsidised childcare, and anti-discrimination labour market programming.