ESSAY - ECONOMICS ECONOMIC GROWTH MODELS (WITH REFERENCE TO WAR) / SUBJECTS: MISCELLANEOUS - MASTERS

Date post: 2017-10-13 09:24

The overall goal of the study is to examine the factors that cause and affect the unemployment in Malaysia. It is important to identify these factors in order to find solutions which can reduce unemployment rate.

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Notes: ** denotes significance at the 5% level, *** denotes significance at 6% significance level and the rejection of the null hypothesis of non-stationary.

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Theoretical framework is the outline which is how the independent variables and dependent variable are related. In this research, Unemployment is the dependent variable. The independent variables which are factors that affect unemployment are consumption, investment, government spending, and trade.

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Hodrick-Prescott Filter is used as detrending method in this research in order to remove the trend component from a time series trend. Hence, the application of linear detrending model to transform the data into stationary.

Structural unemployment is related to the mismatch in skills, as well as the inadequacy in locations or simply the wrong area desired for work, and interpersonal characteristics. For instance, as the technology is improving and changing in the market often causes many skills possessed to be obsolete. With the advancement of computer many jobs in manual book-keeping have been replaced by highly efficient and handy software.

However, the entry of foreign investors will cause negative effect on domestic producer. Domestic producer will be facing some problems if there are too many foreign investors in the market. When the foreign investor becomes monopoly in domestic market, domestic producers are losing the market power. The foreign producers can achieve economic scale with the advance of technology, so this will cause domestic producers hard to survive in domestic market in long term. Government plays an essential role in this case. The government may impose relevant policies such as joint ventures. Domestic producers are given the opportunities to become a part of the joint venture company and they can also share the profit that earned.

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Severance pay is expected to be sufficient to meet the basic need of an unemployed worker until the next job is found. But, one must be clear that, severance pay is not equivalent to unemployment insurance or unemployment assistance.

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