Munich Personal RePEc Archive

Determinants of Unemployment: Empirical Evidence from Palestine

Abugamea, Gaber (2018): Determinants of Unemployment: Empirical Evidence from Palestine.

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Abstract

This study analyzes the determinants of unemployment in Palestine over the period 1994-2017. It employs OLS econometric analysis to examine the relationship between unemployment and the variables of GDP, inflation, labor force, external trade and restrictions on labor movement. Empirical results show the variables of GDP, inflation, labor force, external trade, as a macroeconomic determinants, and restrictions on labor movement, as an institutional one, are main determinants of unemployment in Palestine. Whilst GDP impacted unemployment significantly with a negative effect, it is found inflation, labor force and restrictions on labor movement impacted unemployment significantly and with a positive effect. Also, external trade not affected unemployment significantly. The CUSUM and CUSUMQ are showing that the model is structurally stable within 5 % of critical bound. The study recommends a number of policy implications.

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