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

Author

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  • Cheratian Iman

    (Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University, Tehran, Iran)

  • Farzanegan Mohammad Reza

    (Economics of the Middle East Research Group, Center for Near and Middle Eastern Studies (CNMS) and School of Business and Economics, Philipps-Universität Marburg, Deutschhausstr. 12, 35032 Marburg, Germany)

  • Goltabar Saleh

    (Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University, Tehran, Iran)

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.

Suggested Citation

  • Cheratian Iman & Farzanegan Mohammad Reza & Goltabar Saleh, 2021. "The Asymmetric Impact of Oil Prices on Unemployment in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 17(3), pages 175-204, December.
    • Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:3:p:175-204:n:3
    DOI: 10.1515/rmeef-2021-0004
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    More about this item

    Keywords

    oil rents; unemployment; resource curse; MENA; panel NARDL;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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