Energy Poverty and Unemployment in OPEC Countries: A Dynamic panel GMM Approach

Abstract

Unemployment and energy poverty are significant social challenges faced by many countries, including OPEC members. The ongoing global transition to renewable energy has exacerbated unemployment in OPEC countries due to reduced reliance on traditional energy sources, highlighting the need for a comprehensive study of unemployment and energy poverty in these regions. This study will cover the period from 2015 to 2023, utilizing secondary data from all 12 OPEC member countries. Both trend and econometric tests are employed. The study employs the System Generalized Method of Moments (GMM) for panel data estimation, recognized for its efficiency in addressing endogeneity, unobserved heterogeneity, and dynamic relationships. The study validates the reliability of the model with the Arellano-Bond test for autocorrelation to assess the independence of error terms. The findings reveal that access to electricity significantly increases unemployment, likely due to automation and limited job absorption. Conversely, access to cooking gas shows a potential to reduce unemployment, though the effect is not statistically strong. The study recommends aligning energy strategies with employment goals, investing in vocational training, empowering women through clean cooking initiatives, and adopting inclusive, gender-responsive policies to ensure equitable benefits from energy transitions.