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The Nexus between Economic Institution and Unemployment: Evidence from Sub-Sahara Africa (SSA)

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This study examines the nexus between economic institutions and unemployment using an unbalanced panel data for 37 Sub-Sahara African (SSA) countries between 1995 and 2018. Panel cointegration regression techniques of the Dynamic Fixed Effects (DFE) and Pool Mean Group (PMG) methods are used to gauge the models. The most consistent method is chosen based on the Hausman specification test. Our empirical results reveal that economic institutions have no significant impact on unemployment in the short run. We however found significant and negative impact of economic institutions on total, male and female unemployment in the long run. This suggests that it takes time for institutional reform to impact on unemployment. Thus, to reduce unemployment in the long run, it is imperative to improve on economic institutions that would grantee more free economy. Free economy encourages and protects private enterprises, promotes free movement of capital, labour and goods as well as maintains effective government and stable macroeconomic.

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  • A. Abdulhakeem, KILISHI & A. Hammed, ADEBOWALE & Sodiq Abiodun, OLADIPUPO, 2020. "The Nexus between Economic Institution and Unemployment: Evidence from Sub-Sahara Africa (SSA)," Working Papers 2, Department of Economics, University of Ilorin.
    • Handle: RePEc:ris:decilo:0002
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    1. Horst Feldmann, 2007. "Economic Freedom and Unemployment around the World," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 158-176, July.
    2. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    3. Pesaran, M. H. & Shin, Y. & Smith, R. P., 1997. "Pooled Estimation of Long-run Relationships in Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9721, Faculty of Economics, University of Cambridge.
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    More about this item

    Keywords

    Economic Institution; Unemployment; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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