Macroeconomic determinants of unemployment. Economic Determinants OF Unemployment (SANA) 2022-11-05
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Unemployment is a key indicator of a country's economic health and is affected by a range of macroeconomic factors. In this essay, we will explore some of the main determinants of unemployment and how they can impact the job market.
One of the primary determinants of unemployment is economic growth. When the economy is growing, businesses are more likely to expand and hire new workers. Conversely, when the economy is in a recession, businesses may cut back on hiring or lay off workers in order to reduce costs. This can lead to higher unemployment rates.
Another important determinant of unemployment is the level of productivity in an economy. When workers are productive, they can produce more goods and services, which can lead to higher demand for their labor. On the other hand, if productivity is low, businesses may be less likely to hire new workers or may even lay off existing employees.
The level of wage inflation can also impact unemployment. If wages are rising faster than the rate of productivity, businesses may be less likely to hire new workers due to increased labor costs. On the other hand, if wages are not keeping up with the rate of inflation, workers may be more likely to accept lower-paying jobs in order to remain employed.
The level of government intervention in the economy can also affect unemployment. For example, if the government implements policies that make it easier for businesses to hire and retain workers, such as tax breaks or training programs, unemployment may decrease. On the other hand, if the government imposes regulations that make it more difficult for businesses to operate, such as strict labor laws or high taxes, unemployment may increase.
Finally, global economic conditions can also impact unemployment rates. For example, if a country's major trading partners are experiencing economic downturns, it may lead to reduced demand for the country's exports, which could result in job losses and higher unemployment.
In summary, unemployment is influenced by a range of macroeconomic factors, including economic growth, productivity, wage inflation, government intervention, and global economic conditions. Understanding these determinants can help policymakers and businesses make informed decisions that can help to reduce unemployment and promote economic growth.
Macroeconomic Determinants of Equilibrium Unemployment Insurance, Labour
Many economists believe that FDI is good for an economy, because it provides domestic job opportunities and increase domestic capital. People which are temporally leave off from job and will again start to work are also called unemployed. Many state agencies, for example, serve as clearinghouses for job market information. According to this research people who are searching for job but do not work are known as unemployed. The government should encourage the private investment and discourage the trade restrictions. In Model 3, the signs found were those expected with a statistically significant exchange rate shock at 1% and positively related to unemployment. By using the variables of unemployment, inflation, GDP, foreign direct investment and use the technique of ARDL.
Determinants of Unemployment: Empirical Evidence from Palestine Munich Personal RePEc Archive
Structural unemployment can occur if too many or too few workers seek training or education that matches job requirements. That will be reflected in an increase of the rate of unemployment. It is not surprising that unemployment is a central issue in policy discussions and is often used as an indicator for measuring the labor market situation, performance and health of the economy. Arico 2003 has already observed that the rate of growth is negatively related with the rate of unemployment. In this study, however, FDI is incorporated directly to affect unemployment growth; therefore the effectiveness of the implemented policy will be taken into account more effectively. And the foreign direct investment also affects the unemployment.
Macroeconomic Determinants of Unemployment in Brazil: An ARDL Approach
In many previous attempts, he formalize a unique framework to study the labor market dynamic perspective, providing useful tools to analyze both long and short run unemployment. II In the case of US, its economy began its current economic recovery in December 2001. External trade and economic growth relationship under Trouble: Time series evidence from Palestine. Goshen and Potter point out that, for workers, finding new jobs is harder than simply returning to old ones. He associated with decrease in disposable income, which turn causes a reduction in aggregate consumption and, depending on the intensity and duration, triggers several others problems in the economy, such as the fall in the domestic product, the increase in welfare expenditures in support of families without income, among other social problems.
[PDF] Macroeconomic Factors Affecting Unemployment Rate in China
Based on De Groot, in general, growth and unemployment are intimately related for two reasons. These results were corroborated with the analysis of the ARDL models of cointegration. Although government programs may reduce frictional and structural unemployment, they cannot eliminate it. The three different models revealed stability in the parameters for the period analyzed, as in Figures 3-5. Long-Term Analysis of Estimated Models The verification of the existence of long-term relationship among the variables occurs from the cointegration test. Indirect creative destruction effect.
Determinants of graduate unemployment: case study in Malaysia
They use the time series data from 1976 to 2012. Population: Total number of persons in a nation and here population is used as independent variable which impact on unemployment positively. In this study the value of ECM -1 indicates that the speed of adjustment from short run to long run equilibrium is high. As some results obtained by past researchers showed that economic growth impacts unemployment whereas the others came to a conclusion that unemployment causes economic growth whereby the existence of Granger Causality relationship is quite possible. In contrast, unemployment showed a vertiginous increase from the year 2015. The study estimated the random effects and fixed effects models. As labor market tightens, unemployment rate will fall as money wages tended to rise more rapidly.
Macroeconomic Determinants of Unemployment In the East African Community
ECONOMIC DETERMINANTS OF UNEMPLOYMENT A Case Study of Pakistan Abstract This study examines the determinants of unemployment in Pakistan by using the time span of 1973 to 2016. During the period from 1945 until at least 1968, unemployment rates in the major European economies were extremely low by today's standards. In study data of unemployment, minimum wage rate, inflation, and economic growth is used from 2004 to 2012 study indicates that the economic growth has the insignificant effects and inflation has significant affect on unemployment. With the normality assumption, OLS estimators 1, and 2 are linear functions of ui. This material is composed, in addition to this introduction; this paper is divided into five more sections. These forces include waves of new products and processes, spread of trade and development around the world. In this study, it is expected that there is a negative relationship between the Real GDP and unemployment rate in United States.
If the growth rate increases, it will decrease the net rate at which the stream of profits is discounted. For this, the econometric strategy used is the approach by ARDL models with causality test developed by Toda and Yamamoto. . SEA-Practical Application of Science, Vol. Economic Research Forum Working Papers, No. Autoregressive Distributed Lag ARDL technique is used for examine the results.
Unemployment as an Indicator of Macroeconomic Performance
CPI is one of the measurements of inflation rate. REFERENCES Cheema Ahmed Raza, Atta Ambreen, 2014, Economic Determinants Of Unemployment In Pakistan: Co-Integration Analysis, International Journal Of Business And Social Science, Vol. In this case, in order for the cointegration to continue, a mechanism for correcting these shocks is necessary in order to return to long-term dynamics. But when one independent variable by one independent variable with the unemployment is tested, negative sign for consumer price index and unemployment are obtained. Economic activity may be booming in one region and slumping in another. Thus, domestic firms and foreign multinational corporations will demand more labour force with skills to create products.
Macroeconomic Determinants of Unemployment: Empirical Evidence from Economic Community of West African States
The results in 4. M and Bhalli, M. Rehmat Ullah Submitted by: SANA NAEEM Roll No: 104 B th Semester S DEPARTMENT OF ECONOMICS FATIMA JINNAH WOMEN UNIVERSITY RWALPINDI,PAKISTAN. In the study of determinants of unemployment the ARDL approach has been used for the analyzing the data. In Brazil some particularities make the different approaches more propitious to the diversity of results. Spurious regression result in high significant T-statistic and highly value for the coefficient of determination R-squared, and the R-square is larger than Durbin Watson.
