MACROECONOMIC DETERMINANTS OF UNEMPLOYMENT IN MALAYSIA: AN ARDL ANALYSIS
DOI:
https://doi.org/10.35631/AIJBES.828043Keywords:
ARDL, Macroeconomic Determinants, Unemployment, Labor Market, MalaysiaAbstract
This study examines the macroeconomic determinants of unemployment in Malaysia by focusing on total unemployment as a key indicator of labor market performance in Malaysia. In particular, this study investigates the effects of foreign direct investment, gross domestic product, inflation, interest rate, and population on unemployment using annual time series data from 1990 to 2023. The ARDL approach was employed to estimate both the long-run equilibrium relationships and short-run adjustment dynamics among the variables. The findings reveal that GDP and inflation significantly reduce unemployment, whereas population growth exerts strong upward pressure on unemployment. Interest rates exhibit a positive but relatively weak effect, whereas FDI is statistically insignificant. These results suggest that unemployment in Malaysia is shaped by both cyclical factors associated with aggregate demand and structural factors related to labor supply dynamics. By integrating demand-side, supply-side, and external determinants within a unified framework, this study provides updated empirical evidence on the drivers of aggregate unemployment and offers practical insights for employment generation, investment policy, and labor market planning in Malaysia.
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