Electrokinetic instability refers to unstable electric field-driven disturbance to fluid flows, which can be harnessed to promote mixing for various electrokinetic microfluidic applications. This work presents a combined numerical and experimental study of electrokinetic ferrofluid/water co-flows in microchannels of various depths. Instability waves are observed at the ferrofluid and water interface when the applied DC electric field is beyond a threshold value. They are generated by the electric body force that acts on the free charge induced by the mismatch of ferrofluid and water electric conductivities. A nonlinear depth-averaged numerical model is developed to understand and simulate the interfacial electrokinetic behaviors. It considers the top and bottom channel walls' stabilizing effects on electrokinetic flow through the depth averaging of three-dimensional transport equations in a second-order asymptotic analysis. This model is found accurate to predict both the observed electrokinetic instability patterns and the measured threshold electric fields for ferrofluids of different concentrations in shallow microchannels.