This study adopts panel OLS and panel ARDL to examine the role of institutional quality in institutional quality in oil price-unemployment nexus in African and Asian oil-exporting countries. The POLS results reveal that an increase in oil price does not reduce unemployment in African oil-exporting countries whereas it reduces unemployment in Asian oil-exporting countries. However, interaction of oil price with institutional quality variables such as democratic accountability and rule of law leads to reduction of unemployment in African oil-exporting counties while the interaction of control of corruption and government stability with oil price leads to a further reduction in unemployment in Asian oil-exporting countries. The panel ARDL results, however, show that an increase in oil price leads to a reduction in unemployment in African oil-exporting countries only in the short run while it leads to a reduction in unemployment in Asian oil-exporting countries only in the long run. The effect of the interaction of institutional quality with the oil price, even though slightly changes when PARDL is employed, it largely remains ditto when compared with POLS. Given our results, we conclude that each of the oil-exporting countries needs to strengthen some aspects of their institutional quality apparatuses to ensure that an increase in the oil price brings about the desirable effect on unemployment. Precisely, the fight against corruption and government instability must be given the utmost attention in African oil-exporting countries while the rule of law and democratic accountability must be prioritised in Asian oil-exporting countries.
JEL Classifications: C33; E24; L71; O17