Macroeconomic Factors Affecting Unemployment Rate In China

1.3 Objective of study  

 1.3.1    General Objectives  

Analysis of macroeconomic factors affecting the unemployment rate in China by studying the long-run effects for year 1982 to 2014 is the objective of this study generally.  

1.3.2    Specific Objectives 

Specifically, objectives of this study are as following:-  1) To study the relationship and long-run effect between inflation and unemployment rate. 2) To study the relationship and long-run effect between GDP growth and unemployment rate. 3) To study the relationship and long-run effect between population and unemployment rate. 4) To study the relationship and long-run effect between foreign direct investment and unemployment rate.   

1.4    Research Questions  

Headers of this study are to response the following research questions:- 1. Is there a significant and long-run effect relationship between inflation and unemployment rate? 2. Is there a significant and long-run effect relationship between GDP growth and unemployment rate? 

3. Is there a significant and long-run effect relationship between population and unemployment rate? 4. Is there a significant and long-run effect relationship between foreign direct investment and unemployment rate? 

 1.5    Hypothesis of Study  

Hypothesis 1   : Inflation has significant and long-run effect relationship on unemployment rate. 

  : Inflation has no relationship on unemployment rate. 

Hypothesis 2  

  : GDP growth has significant and long-run effect relationship on unemployment rate. 

  : GDP growth has no relationship on unemployment rate. 

Hypothesis 3 

  : Population has significant and long-run effect relationship on unemployment rate. 

  : Population has no relationship on unemployment rate. 

Hypothesis 4 

  : Foreign direct investment has significant and long-run effect relationship on unemployment rate. 

  : Foreign direct investment has no relationship on unemployment rate.  l

1.6 Significance of Study  

A threefold significance of this paper explained generally. Main research is to explore the relationship of unemployment rate towards GDP growth, inflation, population and foreign direct investment (FDI). Such significant relationships among variables are proven by performing autoregressive-distributed lag (ARDL) bounds testing approach. Literature reviews and related journals and articles are searched to support our findings though.  

Firstly, by analyzing the effects of GDP growth, inflation, population and foreign direct investment (FDI) on unemployment rate, significant relationship may be proven whether those variables are significantly providing effects. Thus, this may benefit to future researchers or scholars whenever they would want to further explore on the factors which may affect unemployment rate.   

Secondly, throughout the whole of research in related to the research problems, recommendations and implications would be suggested at the end of this research. It is expected to contribute informative findings to policymakers, researchers or economists on the factors that affecting unemployment rate in China. By this, they may get to know the current influencing factors which affect unemployment rate. This would provide effective recommendations to policymaker the action which can be taken according to the nature of relationship of unemployment over GDP growth, inflation, population and foreign direct investment (FDI). Similarly, policymakers could adjust national macroeconomic strategies based on the significant variables that affect long-run unemployment rate in China.  

In short, real unemployment rates of China often a concern over periods. However, only few researchers did research particularly towards on it, yet it may only consider as an introduction towards the real unemployment rate of China. Therefore, this study may provide brief ideas to researchers or economists on factors influencing unemployment rate. By this, future researches may attain variables which affect greatly towards unemployment rate to predict real unemployment rate somehow.  

1.7 Chapter Layout  

There are five chapters to be discussed in this paper. Chapter 1 contributes a whole and general review of the paper in explaining the study of which including of research background, problem statement, research questions and objectives, hypothesis of study as well as significance of study. Chapter 2 contains description of empirical and theoretical literature reviews regarding to each variables used in this research obtained from related journals and articles. Next, the methodologies of the research are the main focus in Chapter 3. Then, Chapter 4 provides analyses and reports from estimated model. Meanwhile, this chapter describes, discusses and explains the patterns and outcomes of the analysis in comparative to the hypothesis of our studies. Lastly, Chapter 5 focuses on the summary of major findings, limitations, recommendations and policy implication of this paper for the sake of future researches.  

1.8 Conclusion 

 In a nutshell, the research background and brief introduction to the unemployment rate in China have been explained complying with the problem statement in our studies. Furthermore, the general and specific objectives, significance of study and hypotheses of study have been addressed with clear direction in investigating and determining the long-run effects of macroeconomics factors over unemployment in China. Thus, relevant empirical studies by past researchers will be discussed in Chapter 2.