Unemployment disparities in Asia-Pacific economies: physical capital or human capital

Abstract

We examine whether physical capital and/or human capital accumulation explain(s) unemployment disparities in fifteen Asia-Pacific economies over the years of 1991 to 2019, using the augmented distributed lag (DL) model and the cross-section augmented distributed lag (CS-DL) model. We find significantly positive and negative mean group estimates of human capital and physical capital accumulation on long-run unemployment rate, respectively. These findings are robust to both DL and CS-DL models and to the inclusion of productivity change. However, the effects differ in each country that explains the various dynamics of unemployment rates in the fifteen Asia-Pacific economies.