“Nexus among Unemployment, Governance and Institutional Quality: A

case study of Pakistan

Abstract
This study aims to explore the short run and long run relationship between economic variables
and the unemployment rate in Pakistan. A ARDL model is used to establish the long run and the
short-run relationship between unemployment rate and selected economic variables. Data was
collected from WDI and ICRG for the year’s 1986-2017. The finding of the study showed a
negative and significant relationship at the 5% level of significance between governance,
financial development and human capital with an unemployment rate In Pakistan

Therefore, in the light of the findings of the present study for think tanks of the Pakistan should
always focus on governance situation while making policies to reduce the unemployment rate in
the state to avoid from any abnormal loss. Transparency is the basis of good governance and the
first step in fighting corruption. It provides a universal rationale for the provision of good records

management systems, archives, and financial regulatory and monitoring systems. The new era
requires major investments and spending in human capital. these variables i.e. governance
human capital and financial development are highly significant and negative impact on
unemployment. So, these variables can be the cause of unemployment rate at the highest level.