The nexus between unemployment and economic growth in Bangladesh: Evidence from cointegration and vector error-correction models

Bangladesh persists in addressing unemployment while pursuing economic advancement. This study analyses the impact of unemployment on economic growth in the short as well as the long-term using Johansen Co-integration and the Vector Error-Correction Model (VECM). The research gathers annual time series data spanning from 1993 to 2023. The unit root tests demonstrate that every time series data set remains stationary at the first difference. The ADF test findings demonstrate that the variables are co-integrated at the 1%, 5%, and 10% significance thresholds. The Johansen co-integration test demonstrates a positive long-term correlation between the variables, indicating that a rise in unemployment rates does not negatively impact economic development in Bangladesh. The output from the vector error correction indicates an absence of a short-run causal link between the variables. The VAR stability study demonstrates that all root moduli are below one and are within the unit circle.