The Determinants of Unemployment Rate in Tanzania: An Investigation

Abstract

This study was conducted to analyze the determinants of the unemployment rate in Tanzania from 1992 to 2021. The unemployment rate was the dependent variable with other explanatory variables such as Gross Domestic Product, Inflation rate, wage rate, Education, and population growth. The study employed the Ordinary Least Square (OLS) method to estimate the model after using the Augmented Dickey fuller test for unit root. The results show that GDP is statistically significant at a 5% percent level means that it is an important factor in the determining unemployment rate in Tanzania. Similarly, the inflation rate is positive and statistically significant at 5% percent, it is an important factor in the determining unemployment rate in Tanzania because an increase in the inflation rate increases the unemployment rate in Tanzania. Population growth and education are statistically significant at 5% percent meaning that are also an important factor in the determination of unemployment in Tanzania. Also, the coefficients of inflation and education were statistically significant meaning that an increase in education level and population growth leads to more unemployment rate in the country. This study suggests policymakers in the country to create more awareness of the impact of increasing population growth and education level to result in unemployment rates.