Unemployment Rate in ECCAS Countries: Structural Changes and Stochastic Convergence

Jean Roméo Félix Kouika Bouanza,Mathias Marie Adrien Ndinga

doi:10.4236/me.2020.1111123

Abstract

This paper aims, on the one hand, to specify the dates of potential breaks (or shocks) in the unemployment rate times series of ECCAS countries while verifying whether these shocks, notably accession to CEMAC, could have generated permanent effects and, on the other hand, to assess the hypothesis of stochastic divergence of the unemployment rate. To this end, an econometric analysis is carried out based on unemployment rate time series at quarterly frequency (1991-2018). The results suggest that overall, there is no presence of the hysteresis effect and that CEMAC accession had a significant transitory effect only in Equatorial Guinea. Overall, effective unemployment rates converge towards the average level in the subregion during the sample period.

Highlights

The economic slowdown that Africa has experienced in recent years as a result of external shocks is marked by high inflation coupled with high unemployment (Yaya, Ogbonna, & Mudida, 2019)
The results suggest that overall, there is no presence of the hysteresis effect and that CEMAC accession had a significant transitory effect only in Equatorial Guinea
The question of the dynamics of unemployment rates in regional blocs is a central concern for researchers and government authorities alike

Summary

Introduction

The economic slowdown that Africa has experienced in recent years as a result of external shocks is marked by high inflation coupled with high unemployment (Yaya, Ogbonna, & Mudida, 2019). According to the World Bank (2014), until 2024, only one in four young people in sub-Saharan Africa will find jobs, only a small fraction of which will be in the formal sector This situation of rising unemployment rates over time, which prevails in most African countries, has become very worrying. Krištić et al (2018), unlike other authors (Lee, 2010; Chang, 2011; Meng et al, 2017), have highlighted the existence of stochastic convergence of unemployment rates in the euro zone countries over the period 1995-2016 These divergent findings on the issue under review justify the interest in extending the discussion to ECCAS countries to contribute to the existing literature

Objectives

Results

Conclusion