Impact of refugees on the unemployment rate in Lebanon under Okun's law

Description :

Lebanon is currently facing an unparalleled economic crisis characterized by a growth rate nearing zero and a double-digit unemployment rate, which is further exacerbated by the presence and influx of immigrant refugees. These refugees are compelled to work without obtaining legal recognition, receiving negligible pay that adversely affects the local workforce. The primary objective of this study is to determine, through the Okun law, the consequences of refugees on short and long-run unemployment rates in Lebanon. We use NARDL modeling techniques covering the span from 1991-2021, analyzing the impact of refugees, mainly in the aftermath of the Syrian war in 2011. Our findings demonstrate that deviations in GDP from its potential level have a negative influence on both short and long-run unemployment rates. However, the effects of the ratio of refugee population to overall population on unemployment rates are equivocal in the short-run, yet demonstrably positive in the long run.