COVID-19 Pandemic, Employment Differential and Health Expenditure Nexus in Sub-Saharan African Countries: Evidence from Vector Autorfegressive (VAR) Model

COVID-19 pandemic has imposed a lot of global challenges not only to health but also to other economic activities. The emergence of this pandemic posed disruption in economic activities globally and sub-Saharan Africa countries (SSA) in particular. In order to curtail the spread of the disease, most governments’ imposed restrictions on the movements and other economic activities, including lockdown, closure of schools, markets and other public places. Factories, enterprises and every other production activity stopped. People were laid off and unemployment rose; government expenditure on health also rose. This study is poised to investigate the nexus among the COVID-19 pandemic, employment differential and government health expenditure in SSA using the panel vector autoregressive (PVAR) model, panel VAR impulse response function, and high-frequency panel data of 40 African countries from 2020Q1 to 2021Q4. Findings from the panel VAR model revealed that with rising cases of covid-19 pandemic, the employment gap would widen and/or worsen in SSA countries on the average by about 50.42391%, significantly increase out-of-pocket expenditure on health by about USD0.4202275 billion, and significantly decreases productivity in SSA countries by about USD0.2720265 billion. Again, the panel VAR—impulse response function results showed that when employment and productivity produce impulse, covid-19 pandemic responds by emitting significant gradual negative effects on them, but emits significant gradual positive effects on health expenditure when it produces impulse. The study recommends among others that sub-Sahara African governments need to look out for and explore their peculiarities in the containment of the spread of covid-19.