Female unemployment in Lebanon: a time series analysis

ABSTRACT

This research investigates the relationship between output and unemployment for Lebanon for the post-civil war period. Surprisingly, our results show that unemployment is not contemporaneously affected by changes in gross domestic product (i.e. no Okun’s Law), but only after a lag; however, in the long-run total unemployment and male unemployment are inversely related to changes in output. A puzzling result is the unresponsiveness of female unemployment to GDP both in the short run and in the long-run. Using an Autoregressive Distributed Lag approach, we try to shed some lights to explain this irregularity.

KEYWORDS:

• Okun’s Law
• unemployment
• ARDL
• Middle East

JEL CLASSIFICATION:

• E24
• E60
• C22
• J70

Acknowledgement

The author would like to thank an anonymous referee for his comments and suggestions—also, thanks to Rasha Fattouh for superb research assistance.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 For a recent review see Gordon (2010), Neely (2010) and Ball et al. (2015).

2 Other regional estimations of Okun’s Law include Freeman (2000) Christopoulos (2004) and Villaverde and Maza (2009).

3 The only attempt was done by Naïmy (2005) to estimate the potential output of the Lebanese economy based on surveys carried over 400 households across Lebanon; however, the author does not estimate an Okuńs coefficient but rather assume it to be in the order of 2.5 which is close to the original estimate found by Okun for the U.S. economy (1962).

4 To be more precise, it is not about the number of observations, but rather about the degrees of freedom.

5 For the sake of clarity we do not take into account the dummy variable.

6 The values do not add to 100 due to net indirect taxes and financial intermediary services indirectly measured (FISIM).

7 Data can be found at http://www.cas.gov.lb/index.php/demographic-and-social-en/laborforce-en

Additional information

Funding

Partial funding for this research was provided by the Institute of Financial Economics (IFE) at the American University of Beirut. Usual disclaimer applies.