Global economic integration increases the vulnerability of Sub-Saharan African nations to external price disturbances. This study examines the effects of energy shocks on labor markets across 31 countries from 2000 to 2022. We use the Augmented Mean Group estimator to address cross-sectional dependence within the panel data. Additionally, a Panel Vector Autoregression model captures the dynamic transmission of these shocks over time. The results reveal that energy price shocks significantly reduce aggregate employment levels. Furthermore, sectoral analysis shows that industrial and agricultural employment contract following energy price hikes.These sectors likely suffer from high energy intensity and limited technical substitution flexibility. Conversely, the service sector shows a positive response, potentially acting as a labor sink. Energy volatility remains a primary driver of structural labor market fluctuations in the region. Therefore, policy interventions must aim to decouple labor market stability from volatile energy price movements.
Augustin et al. (Sun,) studied this question.