The Relationship between Unemployment and Economic Growth in Sub–sahara African Countries: A Panel Vector Auto regression Approach
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Date
2016-07
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Addis Ababa University
Abstract
This study examines the relationship between unemployment and economic growth using panel data for a panel of Sub-Sahara African countries for the period 1991-2014. The PMG regression technique result indicates that negative long run relationship between unemployment and economic growth. Both FDI and population growth stimulate economic growth in the region. However, the short-run association between economic growth and these variables are weak. Results from DOLS and FMOLS estimates indicate that there is negative relationship between unemployment and economic growth in the long run. The variance decomposition result shows that the effect of economic growth to reduce unemployment is minimal. Based on these findings, the study recommends that the policy makers of these countries must recognize the effect of economic growth in reducing unemployment and also using the growing population as an input for the economic growth of the region by designing appropriate education system.
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Economic Growth in Sub–Sahara African Countries