Empirical Analysis of Relationship between Unemployment and Economic Growth in Botswana From 1980-2018: A Theoretical Review of Okuns Law
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Volume 9 - September 2020 (09)
Abstract
The objective of this paper is to investigate the empirical relationship between unemployment and economic growth from 1980 to 2018 on the Botswana economy as outlined in the Okun’s law. The economy has been on a positive growth pattern backed by the mineral resource while unemployment has been fairly stable for first three decades up to 2010 before it rises. The ordinary least Squares (OLS) regression model has been used to test such a relation. The robustness of the model was improved by adding inflation and population growth as control variables. The negative relation between unemployment and economic growth was observed to follow OKUN’s law over the study period. The paper suggests that the policy makers of the country should further stimulate the economy through diversification in addressing the problem of unemployment. Inflation and population growth revealed positive and negative relationships on unemployment respectively
Keywords
Unemployment and Economic Growth
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