Unemployment and Economic Growth in Ethiopia

Abstract

Unemployment is one of the major bottlenecks of economic growth in Ethiopia. This study examines descriptively the relationship between unemployment and economic growth (GDP) by relating Okun's law prediction with graphical trend analysis. The result indicated that unemployment has a negative impact on Ethiopia’s economic growth where an increase in unemployment leads the decline of real GDP.  To  reduce the negative impact of unemployment, and expand the employment  generating mechanisms like by strengthening  investment in both agricultural and nonagricultural sectors that absorb more labor force; the study recommends adoption  of more employment generation mechanisms, addressing  the labor market’s failure & improving the labor force productivity, improving agricultural productivity & increasing its linkage with other sectors.

Keywords: Unemployment, economic growth

DOI: 10.7176/DCS/10-3-03

Publication date:March 31^st 2020