The Impact of Government Expenditures on Unemployment: A Case Study of Jordan

Abstract

In this paper, we estimate the effects of Government spending on unemployment in Jordan for the period 1990 to 2019. By using the ARDL co-integration test we found a negative and statistically significant long-run relationship between government spending and the unemployment rate in Jordan. An increase in government spending by a per cent of GDP is found to reduce unemployment by about 0.43 percentage points in the same year. We also noticed that, in the short-run, government spending has a positive and significant impact on unemployment.