Oil dependence, as a main factor in driving economic growth, undoubtedly plays a crucial role in determining labour market outcomes. This paper utilises the quantile regression approach and the dynamic system GMM methods to investigate the role of oil dependence in determining Okun’s coefficient differences. This study uses the difference version of Okun’s law to estimate Okun’s coefficients for each country through the “rolling window technique” from 1991 to 2019 for panel data from 29 oil-producing countries. Okun’s coefficients, estimated in the previous step, became the dependent variable in the second step. The results indicated that the differences in oil dependence prove relevant when accounting for Okun’s law differences in oil-producing countries. In other words, oil dependency is found to be the key determinant of Okun’s coefficient. Particularly as oil production per capita increases, unemployment becomes less sensitive to output growth. Additionally, this study has found that better institution quality and a higher level of unemployment strengthen Okun’s coefficient. Finally, our results confirm the effect of the financial crisis on Okun’s coefficients. The findings of this paper conclude with clear evidence for policymakers about the role of oil dependency in economic performance. Economic policy improvements enable a country’s oil income to be used more effectively by strengthening its economic sectors, achieving higher economic growth, and thus lowering unemployment rates. The governments of these countries should pay attention to the structural reforms that enhance the development of the non-oil sector and improve the incentives for workers to promote employment in other economic sectors

Many studies have investigated the relationship between oil price shock, exchange rate, and gross domestic product (GDP). This paper examines the effects of an oil price shock and the exchange rate on the GDP in the case of Libya. In this context, we applied the Johansen VAR-based cointegration technique to examine the sensitivity of GDP to the oil prices and exchange rate in the long run. In short-run relationships, we have used the vector error correction estimates (VECM) test through time-series data that included the period between 1990 and 2019. The main finding is that the oil price and exchange rate are important influences on the GDP of Libya. This study has proved that oil prices positively affected the Libyan economy, while we found that the exchange rate harms Libyan GDP.

The current study investigates the influence of unemployment rate on the shadow economy in Libya using data that covers the period from 1995 to 2020. Using a time series estimation, namely the fully modified ordinary least squares (FMOLS), this study confirmed the positive association between the unemployment rate and the shadow economy in Libya. The findings indicate that the unemployment rate is associated with an increase in the shadow economy during the time period under study. Meanwhile, we show that more trade openness reduced the size of the shadow economy relative to GDP. Finally, this study suggests some policy implications. The government should pay more attention to the private sector to enhance job creation in the formal economy and overcome the inverse effects of the shadow economy in Libya. In addition, trade openness will contribute to non-oil exports and increase GDP growth, which in turn decreases the size of the informal economy. Keywords: Shadow economy, Unemployment, FMOLS, Libya.