The Relationship between Unemployment and economic growth : Panel data analysis for D-8 countries

Reducing the unemployment rate and achieving a high growth rate are the most important goals of all economies. In this study, meaning of unemployment and economic growth and the relationship between these concepts are explained. For Bangladesh, Indonesia, Iran, Malaysia, Egypt, Nigeria, Pakistan and Turkey which are known as D-8 countries, correlation between unemployment and economic growth are examined by using data obtained in the period covering the years 1998 to 2017. In the analysis, it is first investigated whether there is a cross-sectional dependence in the variables and models. Then, it is investigated whether there is a homogeneity or heterogenity in the models and in the last stage, causality relations between the variables are conducted by using the bootsrap method developed by Konya (2006). According to the analysis results it is determined that there is a casual relationship from economic growth to unemployment rate in Endonesia and in Turkey with significance rate %1 and %5, respectively. According to causality coefficients an increase in economic growth caused a decrease in unemployment rate, as it is expected. Examining the causality relationship from unemployment rate to economic growth, it is concluded that unemployment rate is not the cause of economic growth in any of the D-8 countries.