Analyzing the Influence of Human Capital Investment on Unemployment in the Philippines

Date

6-2024

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jhoana V. Alcalde

Committee Member

Ma. Nova R. Nguyen, Gideon P. Carnaje, Maria Angeles O. Catelo

Abstract

Unemployment in the Philippines continues to be a challenging economic issue. This study aimed to determine the relationship between unemployment and human capital investment indicators – government education expenditure and government health expenditure. Additional explanatory variables namely inflation, population growth and foreign direct investment were also included to examine their effects of other factors in the unemployment rate. Unit root test was used to check for stationarity of each variable. Autoregressive Distributed Lag Approach was used to identify the long-run and short-run relationship of each independent variable to the dependent variable. Tests for autocorrelation, heteroscedasticity, correct specification and normality were applied to ensure the reliability of the model. In the long-run, government health expenditure negatively affects the unemployment because healthier workers tend to look for work or are already employed. Government education expenditure has a positive effect on unemployment due to few employment opportunities and skill mismatch. Inflation positively affects unemployment because of uncertainty that leads to lower investment and lower economic growth while population growth and Foreign Direct Investment were not significant in the long-run. In the short-run, government expenditure on education and inflation negatively affects the unemployment rate, population growth positively affects unemployment while foreign direct investment was not significant.

Language

English

LC Subject

Human Capital, Unemployment, Expenditure- Public

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2024 E2 C38

Notes

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Document Type

Thesis

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