UNIVERSITY OF DHAKA

DEPARTMENT OF ECONOMICS

Unemployment Problem in
Bangladesh and Its Impact on
Economic Growth

Submitted by : Dipto Roy

Reg No:2018-624-476
Introduction: The global unemployment crisis has become an issue of grave
concern. As of the year 2022, 5.77 percent of the global labour force was
unemployed, as reported by the International Labour Organisation (ILO).
Now now, it's reaching crisis proportions in Bangladesh. Our nation has
thousands of unemployed individuals. The unemployment rate in Bangladesh
is 3.6%, according to the Bangladesh Bureau of Statistics (BBS). The poll
also finds that even with the increase in employment, there may be as many
as 2.6 million individuals who are unable to find work. In 2022, Bangladesh
will have a 4.10 percent unemployment rate, down from 5.23 percent the
previous year. The Bangladesh Bureau of Statistics, on the other hand, reports
that the country's GDP grew by 7.2% in the current fiscal year, shattering all
prior records. Income per person is up to $2687 after being $2 458 the
previous fiscal year.

Objective: This study is an attempt to analyze the relationship between

unemployment problem and its impact on economic growth in Bangladesh.
The main objectives are:

1.Find the impact of unemployment on economic growth.

2. How inflation is related to unemployment.

Literature review: Because we are interested in analyzing the connection
between unemployment and economic expansion, there are a great number
of studies and papers that are pertinent to this topic that have been
undertaken by qualified academics. Now that we've got that out of the way,
let's talk about a few of them. In their study on the relationship between
unemployment and economic growth in Arab countries, Khaliq, Soufan,
and Shihab (2006) came to the conclusion that there was a negative
significant consequence. Quintana, Royuela (2012) conducted research on
the topic of unemployment and long-run economic growth, specifically
focusing on the roles that income inequality and urbanization played in the
process. Their findings, which were presented in this research, revealed
that a high rate of unemployment does not display in the manner of
statistics that are important to evaluate long-run growth, and that to the
extent that it does, it has a negative influence on inequality. Neto, Silva
(2013) applied.

They used a quantitative technique for their research, the title of which
was Growth and Unemployment: A Bibliometric Analysis on Mechanisms
and technique, and they discovered that there is a connection between
growth and unemployment. Wajid, Kalim (2013) conducted research on
the subject of The Impact of Inflation and Economic growth on
Unemployment: Time series Evidence from Pakistan. According to the
findings of their research, inflation has a considerable multiplicative effect
on unemployment over the long term, and the rate of economic growth has
an extensive negative impact on unemployment both over the long and
short terms. Jibir, Bappayaya, and Babayo (2015) carried out research with
the objective of re-examining the influence that unemployment has had on
the expansion of the Nigerian economy. Their research, which made use of
OLS, indicated that there is an unfavorable link between unemployment
and economic growth, which is consistent with Okun's law. This finding
was the conclusion of their investigation. Research conducted by Makun
and P.Azun in 2015 was titled "Economic Growth and Unemployment in
 Fiji: A Cointegration Analysis." According to the findings of their
investigation, there is an evidence of a long-run link between
unemployment and economic expansion.

Krugman (1994) published the findings of a study he had performed on the

historical and future causes of high unemployment. In this particular piece
of writing, he discussed the significant economic downturns that occurred
after the Bretton Woods agreement, particularly those that affected the G-7
countries, particularly the United States, Western Europe, Japan, and West
Germany. This report also analyzed the challenges of unemployment in the
countries that are members of the Organization for Economic Cooperation
and Development and made an important difference between cyclical and
structural unemployment fluctuations in unemployment and high
unemployment rates in the industrialized countries throughout that time
period.

Methodology: The annual data for unemployment as a percentage of the

total labor force (modeled ILO estimate), economic growth as GDP growth
(annual percentage), inflation as GDP deflator (annual percentage), industry
as value added (annual percentage growth), terms of trade adjustment
(constant LCU), industry as value added(percentage of GDP), exports of
goods and services (annual percentage growth), and market capitalization of
listed domestic companies (percentage of GDP) is derived from the World
Bank.

This research examines the effect of economic growth, inflation, industry,

terms of trade adjustment, industry value added (percentage of GDP),
exports of goods and services, and market capitalization on unemployment
in Bangladesh using a model with seven variables.
References: Retrieved from
http://www.theindependentbd.com/arcprint/details/96759/2017-05-29 (2017, October 27)

Retrieved from
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&
ve d=0ahUKEwjbzrOk-
4HYAhVMO48KHfrmCuoQFggtMAE&url=http%3A%2F%2Fwww.daily-
sun.com%2Fpost%2F226243%2FBangladesh-attains-7.24pc-GDP-growth-this-fiscal-
breaking- all-records%3A-BBS&usg=AOvVaw1fyxcEVS59a9Uv7ox9y5h1

Chowdhury.h.e 2017, May 14. Bangladesh attains 7.24pc GDP growth this fiscal breaking all
records: BBS, Daily Sun

Abdul-Khaliq, S., Soufan, T., & Shihab, R. A. (2014). The Relationship between Unemployment and
Economic Growth Rate in Arab Country. Journal of Economics and Sustainable Development, ISSN,
2222-1700.

Castells-Quintana, D., & Royuela, V. (2012). Unemployment and long-run economic growth: The role ofincome
inequality and urbanisation. Investigaciones Regionales, (24).