Relationship Between Unemployment and Human Capital

Abstract

This study investigates the Impact of determinants of Human capital such as health, education, population and life expectancy on unemployment in case of Pakistan over the period 1981-2010. The prime objective of the study is to identify and establish a link between human capital and unemployment. The Johansen co-integration approach is used to determine the long-run relationship among variables. Further it applied VECM for short run adjustments to achieve equilibrium in long-run. The results show that our independent variables have significant and strong impact on the dependent variables in long run. The research also provides some suggestions for the policy purpose to reduce the unemployment in the country.

Keywords: Unemployment, Human capital