Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 339

Full Length Research Paper

The economic impact of unemployment and inflation on output growth in South Africa

Leward Jeke
  • Leward Jeke
  • Department of Economics, Faculty of Business and Economic Sciences, Nelson Mandela University, South Africa.
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Lazarus Zungwe Wanjuu
  • Lazarus Zungwe Wanjuu
  • Department of Social Sciences, College of Administrative and Social Science, Kaduna Polytechnic, Kaduna, Nigeria.
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  •  Received: 10 April 2021
  •  Accepted: 15 June 2021
  •  Published: 31 July 2021

Abstract

Unemployment is not only pertinacious to output growth, but it has other social costs. As economies seek to develop through elimination of inequalities, alleviating poverty and ensuring output growth, inflation and unemployment stand as scarecrows to investors. This research aims to evaluate the economic effects of unemployment and inflation on output growth in South Africa. An ARDL model was employed to estimate short-run and long-run impact of unemployment rates and inflation rate among controlled variables on real GDP in South Africa for the period of 1994-2019. The results show that inflation depresses real GDP; human capital and physical capital promotes real GDP. Based on the findings, unemployment can best be tackled through increase supply of and improvement in the quality of physical capital which increases labour productivity as well as investment in human capital. The results found that an in increase in the real GDP will increase investment, which further generates employment.

 

Key words: Unemployment, inflation, output growth.