Economies
The research would like to establish influence of unemployment on economic growth in the long run: Case of Income inequality in the developing countries.
Relationship:
One of the attributes of economic growth crisis in the developing countries has been persistent levels of unemployment and income inequalities. This study will focus on the relationship between income inequality and unemployment and their influences on the long-run economic growth. First part of the study would be to find the relationship between unemployment and economic growth and then secondly, the relationship between income inequality and economic growth. Finally, the study will establish the correlation between the three variables. The independent variables are level of unemployment and income inequality while dependent variable is Long-run economic growth.
Data
The data shall be retrieved from the World Bank annually GDP database and sample of 20 developing countries shall be used. The data to be used in the study are growth as dependent variable to show GDP level between 2004 and 2013.The independent variables shall be level of education of the household, initial level of investment (p1), life expectancy, Salary incomes to the households, Unemployment annual rates between 2004 and 2013 and the no of households in the economy.
The Empirical approach/equation to be used in the study is
∆y01 = c + ᾀ0 (yi0) + ᾀ1 (µei0) +ᾀ2 (ii0) + (X’i0) β + µ1
Where:
∆y01 is the economic growth rate
yi0 is the initial GDP per capita
µei0 is the unemployment variable
ii0 is the income inequality
X is the control variables for investment price, level of education and life expectancy.
Results
The initial GDP have a negative coefficient effect on the economic growth while higher labor, level of education, life expectancy and initial investment price shows positive coefficient effect on the Growth rates. Income inequality has a negative relationship with the economic growth in the long-run. There was positive correlation between income and unemployment with both having an equal effect on the annual economic growth.
The data collected might be biased since the economic policies employed by various countries are different. The Study is likely to be upward biased due omission of other factors like amount of imports, exports and socio-political factors that have direct influence on the economic growth. Upward biasness is mostly witnessed where linear regression has been used to determine the relationship between the variables.
To solve the upward biasness, Instrumental variables which are assumed to the correlated to the dependent variables are introduced. In short, this is simply the use of least square method to eliminate the biasness in the findings as well as boosting the accuracy of the data.
Last Completed Projects
| topic title | academic level | Writer | delivered |
|---|