Analyzing The Impact of the Labor Force on Economic Growth in Somalia (1991-2022)

This study examines the impact of labor force dynamics on economic growth in Somalia, focusing on labor force participation and unemployment rates from 1991 to 2022 using regression analysis of secondary data from World Bank indicators and SESRIC. It analyzes key economic variables—Gross Domestic Product (GDP), Labor Force (LF), Labor Force Participation Rate (LFP), and Unemployment Rate (UN)— using descriptive statistics, unit root tests, co-integration analysis, and regression modeling. The results indicate stable distributions for variables, with non-stationarity at levels but stationarity at first differences for most. Co-integration tests reveal a long-term equilibrium relationship among these variables, showing that while the labor force positively influences GDP, higher unemployment and lower participation negatively affect it. Short-run analyses corroborate these findings, highlighting significant adverse effects of unemployment and participation on GDP. The Error Correction Model (ECM) indicates a rapid adjustment towards equilibrium, with around 87.78% correction of deviations. Diagnostic and stability tests confirm the model's reliability, emphasizing the importance of labor market dynamics in influencing economic output in the short and long term. Keywords: Labor Force, Economic Growth, Somalia