Abstract
The current study has been designed to investigate the relationship between unemployment and the different factors having impact on unemployment directly or indirectly. The basic purpose of the study is to check that either their effects are significant or insignificant. At first, normality, independence, homoscedasticity and autocorrelation are checked. Stepwise regression with forward selection technique is utilized for the model selection. Model selection criteria used is to select a best fitted model. For the said purpose, yearly data of Pakistan from 1990 – 2010 is utilized. In the study, unemployment is the dependent variable and GDP, FDI, Budget deficit, Inflation, Literacy rate, population growth rate and Labor force are taken as explanatory variables. Our results revealed that the Labor force has a positively effect on the unemployment while inflation and FDI has a negative effect on the unemployment. SPSS, E-views, Mini tab and Microsoft Excel software’s are used to analyze the data under study.