1Associate Professor of Economics, Bahauddin Zakariya University, Multan, Pakistan
2Lecturer in Economics, Government College of Science, Multan, Pakistan
3Lecturer in Economics, The Islamia University of Bahawalpur, Bahawalnagar Campus, Pakistan
Online published on 30 December, 2015.
This paper critically analyzes the effect of GDP on unemployment level i.e. the validation of Okun's Law in Pakistan. Annual data for the period 1974–2014 is taken from Economic Survey of Pakistan. The study revealed that GDP is negatively related to unemployment. The negative effect of GDP on unemployment is low, implies that other factors like lose employment policies and non availability of professional skills retard the employment generating capacity of GDP growth rate. This study uses Augmented Dickey Fuller (1981) Test to test unit root problem. The study concludes that increase in GDP significantly decreases unemployment in the long-run.
GDP; GDP Growth; Unemployment; ARDL
