Empirical Evidence of Lilien Hypothesis from African Countries

Abstract

The aim of this study is to investigate the validity of the sectoral shift hypothesis in African countries for the period 1991-2023. It analyses the long-run relationship between unemployment and sectoral shift of labour for the countries using the panel dynamic ordinary least squared (DOLS) model. It contributes to literature on the Lilien hypothesis for African countries The results conclude to evidence of a trade-off between sectoral shift of employment and unemployment in long run. An implication for economic policies is that we can reduce unemployment rate while working toward shifting employment from low productive sector to the high-productivity sector. Consequently, it is recommended that policymakers implement strategies to expand manufacturing and other high-productivity sectors, to invest in education and skills upgrading aligned with industrial and modern needs, to create more decent work conditions in industrial and service sectors.