FACTORS EFFECTING UNEMPLOYMENT IN PAKISTAN: A TIME SERIES ANALYSIS

Abstract

Macroeconomic indicators are considered as the most crucial factors affecting the economic conditions as well as other important sectors of a country. Similarly policy framework plays a pivotal role in shaping the impact of these macroeconomic indicators on economic activities of a country. Proactive policies that encourage and protect these indicators can maximize the positive outcomes. Additionally, macroeconomic stability is essential, as stable economic environment attracts further investments, fostering a cycle of sustained job growth. The study aimed to identify the factors influencing unemployment (UNMP) in Pakistan. For this reason, variables including, Foreign Direct Investment (FDI), Foreign Remittances (RR), Gross Domestic Product (GDP), Trade (TR), Exchange Rate (EXCH), Inflation rate (INFL) were taken as independent variables to analyzed the impact of these variables on UNMP. Secondary data from 1971-2020 is taken from World Development Indicators (WDI) and regression model is analyzed. The results indicate that FDI, GDP, TR and RR have a significant impact on UNMP. More precisely, INFL is found negatively associated with UNMP and a positive but insignificant association of EXCH is revealed.