Employment generation in net oil‐importing and net oil‐exporting countries: the role of energy consumption

Abstract

AbstractWhile countries of the world look forward to meeting the increasing demand for energy, and improving the welfare of their citizens through provision of jobs, the way energy use affects employment will depend on the status of the country as a net importer or exporter of the most substantially consumed energy. Hence, this study comparatively examines the energy consumption‐employment nexus while putting the energy status of countries as net oil importers and net oil exporters into consideration. The empirical results indicate that employment does not respond to energy consumption in the net oil‐exporting countries for reasons attributable to inefficient energy use, overdependence on the abundant energy resource deposits and unstable world energy prices. This is unlike the case of the net oil‐importing countries where energy consumption significantly drives employment both in the short‐run and long‐run. Although the short‐run impact is negative (−1.921 per cent) due to the immediate impact of high energy prices at certain times, the strong positive long‐run impact (10.987 per cent) can be related to energy use efficiency. The results are robust to the consideration of possible outliers in the cross sections. Appropriate policies are drawn for both groups from these findings.