Does human capital investment influence unemployment rate in Bangladesh: a fresh analysis

Mahinur Begum Mimi; Md. Ahasan Ul Haque; Md. Golam Kibria; Mahinur Begum Mimi; Md. Ahasan Ul Haque; Md. Golam Kibria

doi:10.3934/NAR.2022016

National Accounting Review

2022, Volume 4, Issue 3: 273-286. doi: 10.3934/NAR.2022016

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Research article

Does human capital investment influence unemployment rate in Bangladesh: a fresh analysis

Department of Economics, Noakhali Science and Technology University, Noakhali-3814, Bangladesh

Received: 05 May 2022 Revised: 21 July 2022 Accepted: 05 September 2022 Published: 14 September 2022
JEL Codes: J24, J64, I15, I22

This study looks at how Bangladesh's human capital investment has affected unemployment from 1995 to 2019. To identify the study's unit root, we employed the ADF and PP tests. The short- term and long-term impacts of human capital investment on unemployment are estimated using the Autoregressive Distributive Lag (ARDL) model. The presence or absence of cointegration is assessed using the ARDL bound cointegration test. The Pairwise Granger Causality test, in contrast, is used to ascertain whether there exist causal relationships between variables. The study's findings demonstrate that government health spending on human capital has a significant impact on Bangladesh's long-term unemployment rate. Government spending on education and the unemployment rate are causally related in a single direction, according to the Pairwise Granger test. In the short term, the analysis showed no discernible relationship between human capital investment and unemployment rates. To build a healthy nation and eventually lower Bangladesh's unemployment rate, it is urged that the government should increase health spending and strengthen the health sector. To connect education with employment, the government may give vocational and career-focused education equal weight with general education.
- human capital,
- unemployment,
- health expenditure,
- educational expenditure
Citation: Mahinur Begum Mimi, Md. Ahasan Ul Haque, Md. Golam Kibria. Does human capital investment influence unemployment rate in Bangladesh: a fresh analysis[J]. National Accounting Review, 2022, 4(3): 273-286. doi: 10.3934/NAR.2022016

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Abstract

This study looks at how Bangladesh's human capital investment has affected unemployment from 1995 to 2019. To identify the study's unit root, we employed the ADF and PP tests. The short- term and long-term impacts of human capital investment on unemployment are estimated using the Autoregressive Distributive Lag (ARDL) model. The presence or absence of cointegration is assessed using the ARDL bound cointegration test. The Pairwise Granger Causality test, in contrast, is used to ascertain whether there exist causal relationships between variables. The study's findings demonstrate that government health spending on human capital has a significant impact on Bangladesh's long-term unemployment rate. Government spending on education and the unemployment rate are causally related in a single direction, according to the Pairwise Granger test. In the short term, the analysis showed no discernible relationship between human capital investment and unemployment rates. To build a healthy nation and eventually lower Bangladesh's unemployment rate, it is urged that the government should increase health spending and strengthen the health sector. To connect education with employment, the government may give vocational and career-focused education equal weight with general education.

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