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THE IMPACT OF UNEMPLOYMENT ON ECONOMIC GROWTH IN CHINA
ABSTRACT
Economic growth which is considered as one of the best indicator of measuring the robustness of every economy is essential in understanding its relationship with unemployment which is an important macroeconomic indicator that reflects the incompetence of any economy to make full use of its human resources.
Hence, a macro-economic secondary and time series data was extracted from the World Development Indicator (WDI) for the period of 1991-2018 in China. In conducting the econometric analysis of the study, both the Augmented Dickey-Fuller Test and Phillips Perron Test were employed to test and confirm the stationary level of the variables of study; the Autoregressive Distributed Lagged (ARDL) cointegration and the ARDL Bounds test were employed to test for the short-run and the long-run cointegration of the variables of study since both variable were stationary at first difference I (1).
The finding of the study reveals that there are negative short-run and a long-run relationship between unemployment and economic growth. However, Granger causality Test also reveals that both unemployment and economic growth do not impact each other.
Keywords:
Granger causality, Economic growth, Unemployment rate, Stationarity and Cointegration