Exploring the Factors Associated with Unemployment Rate

Abstract

Unemployment is a major problem in the world. It is very consistent problem all over the countries. The main purpose of this study is to know which factor is the main reason of unemployment. The analysis is based on the secondary data collected through authentic internet resources. The dataset is taken on annually basis from 1991 to 2020. The main demographic factors involved in this research are Gross Domestic Product (GDP), Foreign Direct Investment (FDI), Population Growth Rate (PGR) and Inflation. Multicollinearity analysis and outlier analysis is performed on all the factors included in the analysis. No multicollinearity issue is found in the analysis, while some outliers are observed in FDI. Due to outlier issue, the research is moved on to the robust regression analysis. Two strong factors are found for reduction of the unemployment rate such as PGR and FDI. The findings showed that the unemployment rate can be decreased by the increase in FDI and PGR. The results can also be generalized as well as on the other countries economy.