TITLE:
Capacity Utilisation and Unemployment in Selected West Africa Countries
AUTHORS:
Alaa M. Soliman
KEYWORDS:
NAIRU, Capacity Utilisation, Unemployment, West Africa
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.6,
October
18,
2017
ABSTRACT: The
purpose of this research paper is to examine the proposition that capacity
utilisation is an important factor in the determination of unemployment and
wages. Underlying this proposition is the notion that capacity utilisation
helps to determine the future path of the economy and is a significant factor
in the response of the economy to different supply and demand shocks. We
derived capacity utilisation and unemployment relationships, which were
estimated and tested using data covering from 1997 to 2016 for three West
Africa countries. The results suggest that long-term unemployment and capacity
utilisation have a significant impact on unemployment. The policy implications
of our findings are that in view of the strong effect of capacity utilisation
on unemployment, programmes that enhance efficiency in production and
investment enhancing policies may allow unemployed to regain access to the
labour market.