Oil Price and Unemployment in Oil Importing Economies: Linear and Nonlinear Panel ARDL Evidence from Africa

The extant literature suggests a significant association between oil prices and unemployment. However, the relevant literature is unclear on how oil prices impact unemployment in oil-importing economies. In the present study, we empirically examine the impact of oil prices on unemployment in 29 African oil-importing economies employing the linear and nonlinear panel ARDL techniques. Our findings demonstrate a negative and significant relationship between oil prices and unemployment in the short run. In contrast, we observe a direct but weak association between unemployment and oil prices in the long run. Besides, unemployment reacts negatively and positively, respectively, to positive and negative changes in oil prices in the short run. In the long run, we detect that an increase in oil prices aggravates unemployment significantly, but a fall in oil prices improves unemployment significantly. All our findings prove robust to data of different frequencies (quarterly and yearly) and Brent and WTI oil price indices.