The Determinants of Unemployment in Sudan: A Co-integration and Error Correction Model Analysis (1981-2011)
Abstract
The main purpose of this paper is to investigate the determinants of unemployment in Sudan using time series data over the period 1981 - 2011. Co integration and VECM techniques were applied to carry out the investigation. The overall econometric analysis showed that the variables under consideration have co integrating relationships implying that they have long-run relationships. The results of VECM estimation suggests that growth in GDP, the interaction between FDI and average years of schooling play a positive role in unemployment reduction in the long-run, while in the short-run this impact has been reversed. Inflation is found to have a positive impact on unemployment mitigation in the short run and, therefore, provides strong evidence to be added to the already existing large body of literature validating the existence of short-run Phillips Curve. On the other hand, the estimated results suggest that economic openness and oil production contribute negatively to unemployment reduction in the short as well as in the long run. Also the findings of the study confirmed the pivotal role for privatization policy in combating unemployment.
References
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Bjørnstad, R., & Skjerpen, T. (2006). Trade and inequality in wages and unemployment. Economic Modelling, 23(1), 20-44.
Biagi F. Lucifor, C. (2008). Demographic and education effects on unemployment in Euro Labour Economics, 15, 1076–1101.
Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth?. Journal of international Economics, 45(1), 115-135.
Chaudhuri, S., & Banerjee, D. (2010). FDI in agricultural land, welfare and unemployment in a developing economy. Research in Economics, 64(4), 229-239.
Caporale, G., & Skare, M. (2011). Employment growth, inflation and output growth: Was Phillips right? Evidence from a dynamic panel.
Détang-Dessendre, C., & Gaigné, C. (2009). Unemployment duration, city size, and the tightness of the labor market. Regional Science and Urban Economics,39(3), 266-276.
Dutt, P., Mitra, D. and Ranjan, P. (2009). International trade and unemployment: theory and cross-national evidence. Journal of International Economics, 78(1), 32-44.
Eita, J.H. and Ashipala, J.M. (2010). Determinants of Unemployment in Namibia, International Journal of Business and Management, 5(9).
Fan, R. Y., Ng, S. T., & Wong, J. M. (2011). Predicting construction market growth for urban metropolis: An econometric analysis. Habitat International,35(2), 167-174.
Felbermayr, G., Prat, J., & Schmerer, H. J. (2011). Trade and Unemployment: What do the data say?. European Economic Review, 55(6), 741-758.
Feldmann H. (2012). Banking deregulation around the world, 1970s to 2000s: The impact on unemployment International Review of Economics and Finance (24) 26–42.
Fu, S., Dong, X., & Chai, G. (2010). Industry specialization, diversification, churning, and unemployment in Chinese cities. China Economic Review, 21(4), 508-520.
Gaston, N., & Rajaguru, G. (2013). How an export boom affects unemployment. Economic Modeling , 30, 343-355.
Gan, L., & Zhang, Q. (2006). The thick market effect on local unemployment rate fluctuations. Journal of Econometrics, 133(1), 127-152.
Georgantopoulos, A. G., & Tsamis, A. D. (2011). The Macroeconomic Effects of Budget Deficits in Greece: A VAR-VECM Approach. International Research Journal of Finance and Economics, (79), 156-166.
Gujarati,D.N.(1995). Basic Economterics (3rd ed). New York :MaGrow-Hill,Inc.
Gundlach, E. (1995). The role of human capital in economic growth: New results and alternative interpretations. Review of World Economics, 131(2), 383-402.
Hasan, R., Mitra, D., Ranjan, P., & Ahsan, R. N. (2012). Trade liberalization and unemployment: Theory and evidence from India. Journal of Development Economics, 97(2), 269-280.
IMF (2010), World Economic Outlook (WEO) database on web site: http://www.imf.org
Jean, S., & Jimenez, M. (2011). The unemployment impact of immigration in OECD countries. European Journal of Political Economy, 27(2), 241-256.
Karanassou, M., & Sala, H. (2010). The US inflation–unemployment trade-off revisited: New evidence for policy-making. Journal of Policy Modeling, 32(6), 758-777.
Karanassou, M., Sala, H., & Snower, D. J. (2005). A reappraisal of the inflation–unemployment tradeoff. European Journal of Political Economy, 21(1), 1-32.
Kee, H. L., & Hoon, H. T. (2005).Trade, capital accumulation and structural unemployment: an empirical study of the Singapore economy. Journal of Development Economics, 77(1), 125-152.
King, T. B., & Morley, J. (2007). In search of the natural rate of unemployment .Journal of Monetary Economics, 54(2), 550-564.
Khalid, A. M., & Kawai, M. (2003). Was financial market contagion the source of economic crisis in Asia?: Evidence using a multivariate VAR model. Journal of Asian Economics, 14(1), 131-156.
Liu, Q. (2012). Unemployment and labor force participation in urban China. China Economic Review, 23(1), 18-33.
Lefter, A. M. (2008). Unemployment Insurance and Labor Turnover: Estimates from a Multiple-spell Two-state Competing-risk Hazard Model with Endogenous Unemployment Insurance Receipt. ProQuest.
Mortensen, D. T. (1970). Job search, the duration of unemployment, and the Phillips curve. The American Economic Review, 847-862.
Nour, S. S. O. M. (2011). Labour market and unemployment in Sudan (No. 007). United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
Ohlsson, H. (1995). Labor market policy, unemployment and wages-A VAR model for Sweden 1969- 1990. Department of Economics, Uppsala University.
Palley, T. I. (2004). The causes of high unemployment: labor market sclerosis versus macroeconomic policy. Challenging the market: the struggle to regulate work and income
Saint-Paul, G. (1996). Unemployment and increasing private returns to human capital. Journal of Public Economics, 61(1), 1-20.
Saarela, J., & Finnäs, F. (2006). Can the low unemployment rate of Swedish speakers in Finland be attributed to structural factors?. Journal of Socio-Economics, 35(3), 498-513.
Snower, D., Karanassou, M., & Sala, H. (2002). A Reappraisal of the Inflation-Unemployment Tradeoff. IZA Discussion Papers.
Stockhammer, E., & Onaran, Ö. (2004). Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model. Structural Change and Economic Dynamics, 15(4), 421-447.
Riddell, W. C., & Song, X. (2011). The impact of education on unemployment incidence and re-employment success: Evidence from the US labor market. Labor Economics, 18(4), 453-463.
Russell, B., & Banerjee, A. (2008). The long-run Phillips curve and non-stationary inflation. Journal of Macroeconomics, 30(4), 1792-1815.
Valadkhani, A. (2003). The causes of unemployment in Iran: An empirical Investigation. Faculty of Commerce-Papers, 390.
World Bank (2011): World Bank Indicators, on web site: www.worldbank.org.
Published
2013-06-01
How to Cite
MUSTAFA, Mohammed Elhaj.
The Determinants of Unemployment in Sudan: A Co-integration and Error Correction Model Analysis (1981-2011).
Gezira Journal of Economic and Social Sciences, [S.l.], v. 4, n. 1&2, june 2013.
ISSN 1858-6023. Available at: <http://37.60.236.48/index.php/gjess/article/view/256>. Date accessed: 03 june 2026.
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