Economic Sanctions, Oil Price Fluctuations and Employment: New Empirical Evidence from Libya

Abstract

This research attempts to examine the links between fluctuating oil prices, economic sanctions and the employment in the Libyan economy. In particular, this study attempts to answer the basic question whether UN’s resolutions number 748 (1992) of 31 March 1992 and oil price fluctuations have any significant influence on the employment in Libya. One of this study’s key findings is that fluctuating oil prices and economic sanctions have strongly affected both the Libyan and non-Libyan employees. The periods of sharp decline in oil prices (1983-1998) and economic sanctions (1990-2003) had a negative impact on the movement of skilled non-Libyan workers. This resulted in a huge loss of this type of labour, which is almost impossible to replace in the short term. It could also negatively affect various other sectors in the country, such as oil production and industry, among others. In addition, our cointegration results show that there is no evidence of long run relationship between the non-Libyan employees and fluctuating oil prices in Libya. This research brought a new empirical evidence on the relationship between fluctuating oil prices, economic sanctions and the employment in the Libyan economy. It also provides important policy implications for the Libyan government, the Security Council and multinational companies. JEL classification: C22, E20, E30.