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Macroeconomic Shocks and Employment in sub-Sharan Africa: Do Labour Market Institutions Matter?

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  • Adegboye Abidemi C.

    (Department of Economics, University of Lagos, Akoka-Yaba, Lagos)

  • Alao-Owunna Ifeoluwa

    (Department of Economics, Adeleke University, Ede, Osun State.)

  • Bank-Ola Folake R.

    (Department of Economics, Adeleke University, Ede, Osun State.)

Abstract

The effects of macroeconomic shocks and labour market institutions on employment in sub-Saharan African countries are examined in this study. Using a sample of 27 SSA countries for the period 2007 to 2018, both linear and interactive relationships are investigated. The results show that labour market institutions (especially in terms of wage flexibility) dampen the effects of shocks on modern employment but amplify the effects of shocks on informal employment in the sampled SSA countries. There is also evidence that shocks themselves (especially those emanating from the external sector) do not matter for a huge proportion of employment changes in SSA countries. Rather, the direct effects of shocks on employment are more profound in the formal sector. The study therefore concludes that reforming the informal sector will help to ensure the effectiveness of labour market institutions in mitigating the negative impacts of external shocks on employment in SSA.

Suggested Citation

  • Adegboye Abidemi C. & Alao-Owunna Ifeoluwa & Bank-Ola Folake R., 2022. "Macroeconomic Shocks and Employment in sub-Sharan Africa: Do Labour Market Institutions Matter?," Zagreb International Review of Economics and Business, Sciendo, vol. 25(2), pages 97-118.
    • Handle: RePEc:vrs:zirebs:v:25:y:2022:i:2:p:97-118:n:1006
    DOI: 10.2478/zireb-2022-0017
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    More about this item

    Keywords

    hiring and firing; sectoral employment; terms of trade; vulnerable employment; wage flexibility;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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