Impact of trade openness, human capital, public expenditure and institutional performance on unemployment: evidence from OIC countries

Sajid Ali, Zulkornain Yusop, Shivee Ranjanee Kaliappan, Chin Lee () and Muhammad Meo ()

International Journal of Manpower, 2021, vol. 43, issue 5, 1108-1125

Abstract: Purpose - This study examines the impact of trade openness, human capital, public expenditure and institutional performance on unemployment in various income groups of Organization of Islamic Cooperation (OIC) countries. Design/methodology/approach - Traditional panel data methodologies neglect the issue of cross-sectional dependence and provide ambiguous outcomes. A novel approach, “dynamic common correlated effects (DCCE)”, is utilized in this study to tackle with aforementioned issue. Pooled mean group (PMG) estimation is also applied to verify the robustness of the findings. Findings - The long-run estimates show that trade openness has a significant and negative relationship with the unemployment rate in overall and lower-income OIC economies and a positive correlation with unemployment in higher-income OIC countries. Public expenditure is negatively and significantly correlated with unemployment in higher-income and overall OIC economies. Moreover, human capital reduces unemployment in higher-income and overall OIC countries while increases unemployment in lower-income OIC economies. Practical implications - The research tends to endorse the argument for continuous trade openness policy along with efficient use of public expenditure and improved institutional performance to reduce unemployment in OIC countries. Originality/value - The DCCE approach in this research considers heterogeneity and cross-sectional dependence between cross-sectional units and thus gives robust outcomes.

Keywords: DCCE estimation; OIC countries; Trade openness; Public expenditure; Cross-sectional dependence human capital; E01; F13; H80; J01 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:ijm-10-2020-0488

DOI: 10.1108/IJM-10-2020-0488

Access Statistics for this article

International Journal of Manpower is currently edited by Professor Adrian Ziderman

More articles in International Journal of Manpower from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().