Economic globalisation and labour market outcomes in Africa

Abstract

Abstract Decoupling the causal impact of globalisation on labour market outcomes is critical for economic policy and sustainable development. Previous studies have uncovered a positive, but sometimes conflicting results on the relationship between globalisation and the labour market in different countries and periods. I investigate how labour market outcomes respond to economic globalisation using data from 41 African countries from 1991 to 2019 and estimation techniques that correct for autocorrelation, heteroscedasticity, heterogeneity and cross-sectional dependence. Results show that the effect of economic globalisation on all labour market outcomes is bounded to an interval of zero, allowing me to rule out the possibility of any causal effect. These results challenge literature on the putative benefits of economic globalisation. Nonetheless, the findings are consistent with the observed pattern of jobless growth in most African countries over the past three decades. Moving forward, Africa’s development strategy should not only rely on economic liberalisation, but on consolidating domestic macroeconomic policies and institutions. JEL Classification: F16; F66; E24; C23.