Unemployment impact of network sectors and employment protection legislation reforms: Evidence from selected african countries

Kwamivi Mawuli Gomado () and Isaac Amedanou ()
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Kwamivi Mawuli Gomado: LERN - Laboratoire d'Economie Rouen Normandie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université
Isaac Amedanou: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne

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Abstract: This paper examines the dynamic effects of Employment Protection Legislation (EPL) reforms and Network Sector reforms on unemployment in selected African countries from 1990 to 2014. Reforms refer to changes in the EPL or Network Sector institutions index. Using local projections combined with augmented inverse probability weighting (LP–AIPW) and Entropy Balancing techniques to address endogeneity concerns, our findings show that EPL reforms reduce unemployment from the first year after their implementation, while Network Sector reforms also lower unemployment, with significant effects emerging from the second year onward. Robustness checks confirm that these results are consistent across alternative specifications, different definitions of reform episodes, and alternative labor-market outcomes such as employment and labor force participation. The heterogeneity analysis shows that both types of reforms reduce unemployment among men and young workers aged 15–24, while significant effects for women are concentrated among young female workers. Finally, we identify key transmission channels through which the reforms operate, including reductions in informality, increases in domestic investment and foreign direct investment, and short-run improvements in total factor productivity.

Date: 2026-04
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Published in World Development, 2026, 200, pp.107304. ⟨10.1016/j.worlddev.2025.107304⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-05429684

DOI: 10.1016/j.worlddev.2025.107304

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