Is unemployment caused by a socioeconomic phenomenon in the case of Kuwait

Abstract

This study examines the main macroeconomic factors triggering unemployment in Kuwait. In particular, it examines the impact of GDP growth, inflation rate, government expenditure on education, oil prices, and population growth on unemployment. The yearly data sample covers the period between 1993 and 2016. The estimated model is tested using time series analyses, such as a unit root test (the Augmented Dickey-Fuller test), the autoregressive distributed lag (ARDL) model (bounds testing), the error correction model (VECM), and the Granger causality test. The findings indicate that oil prices, population growth, GDP growth, and government spending on education Granger cause unemployment in both the short run and long run. Moreover, oil prices and government expenditure on education exhibited a significant negative effect on unemployment in the long run. Given the unique characteristics of the demographic features of Kuwait's population, this paper finds that the population growth rate contributes to unemployment in Kuwait, indicating that the increased population of expatriates causes unemployment among Kuwaiti nationals.