Asymmetric impacts of oil price shocks on unemployment: Evidence from Nigeria

Nigerian economy depends mainly on oil. The country produces and exports crude oil and at the same time, imports refined oil as input into domestic production. Consequently, changes in oil price will have a major effect on phenomenon such as unemployment rate. This paper assesses the impacts of changes in oil price on the unemployment rate. Applying the standard linear Autoregressive Distributed Lag (ARDL) approach, the result shows that shock to oil price has no significant long-run effect on the rate of unemployment. However, when the non-linear ARDL (NARDL) is applied, the results provide evidence of log-run but asymmetric effects of oil price shocks on the rate of unemployment. This finding suggests that the best way of modelling the unemployment-oil price nexus is NARDL that allows for short-run symmetry with long-run asymmetry.