The Asymmetric Impact of Oil Prices on Unemployment in the MENA Region

Iman Cheratian, Mohammad Reza Farzanegan () and Goltabar Saleh
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Goltabar Saleh: Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University, Tehran, Iran

Review of Middle East Economics and Finance, 2021, vol. 17, issue 3, 175-204

Abstract: We examine the effects of oil prices on unemployment rates in the Middle East and North Africa (MENA) over the period of 1991–2017. Using the panel nonlinear autoregressive distributed lag (panel NARDL) model, the results show that in the long run, positive changes of oil prices exert a positive (increasing) impact on the unemployment rate. However, negative changes in oil prices have a significant decreasing effect on the unemployment rate in the MENA region. We also find that the short run changes in oil prices do not show a significant effect on unemployment rates. Our findings are robust to an alternative measure of oil rents per capita and in line with predictions of the resource curse hypothesis. Countries with higher dependency on natural resource rents experience, on average, a slower long run economic growth rate (and thus higher unemployment rates), compared with countries with lower dependency.

Keywords: oil rents; unemployment; resource curse; MENA; panel NARDL (search for similar items in EconPapers)
JEL-codes: E24 Q43 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/rmeef-2021-0004

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