MODELING THE UNEMPLOYMENT RATE USING THE PANEL ARDL

Abstract

The purpose of this study is to investigate the effects of macroeconomic variables on the unemployment rate in North African countries. The analysis employed econometric techniques such as panel unit root tests, cointegration analysis, and model estimation. In this study, the short-term and long-term effects of macroeconomic variables on the unemployment rate were investigated using a combined autoregressive distributed lag (ARDL) panel approach.

The results show that there is a long-term relationship because the error correction parameter, or adjustment coefficient, is statistically significant and negative. In the short run, gross domestic product growth does negatively affect the unemployment rate; the effect is significant in the long run. On the other hand, the effect of labor force growth is positive and significant in the short run. However, it is not significant in the long run. Finally, the results suggest that the effect of foreign direct investment on the unemployment rate is negative and significant, both in the long run and in the short run.