Unemployment determinants in Malaysia: An econometric analysis

Abstract

This study focuses on unemployment, a crucial indication of economic well-being. Comprehending its determinant is crucial for policy intervention. This study examines the factors influencing the unemployment rate in Malaysia from 1983 to 2015, with practical implications for policy implementation. The analysis utilizes an econometric framework, incorporating time-series methodologies such as the Augmented Dickey-Fuller (ADF) test, Johansen cointegration test, Vector Autoregression (VAR), and Vector Error Correction Model (VECM). The main variables analyzed include life expectancy, inflation rate, and Foreign Direct Investment (FDI). Research reveals that life expectancy significantly reduce unemployment, whereas other variables exhibit varying degrees of influence. The results include considerable policy ramifications, highlighting strategies for fostering sustainable economic growth and alleviating unemployment. This study presents a comprehensive examination of unemployment trends in Malaysia, yielding valuable information for policymakers and academics