The Impact of Research and Development Expenditure on Unemployment Rate
Author(s)
Jindal, Adit
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Abstract
Countries often commit to increasing their expenditure on Research and Development (R&D) as a
way to boost economic growth and counteract increasing unemployment rates. There exist few
independent studies showing the impact of R&D expenditure on economic growth, and even fewer
showing impact on the unemployment rate. This study attempts to uncover the relationship between
the unemployment rate as a percentage of the labor force (UE) and the R&D expenditure as a
percentage of gross domestic product (GERD) by analyzing data from 71 countries. The other
explanatory variables that are taken into consideration are the education level (UNDP Education
Index), inflation, economic growth (percentage GDP growth), total population, compensation of
employees, manufacturing sector’s value added (% of GDP), and service sector’s value added (% of
GDP). Further, a time delay of three years has been purposefully added to allow the impact of R&D
expenditure to manifest itself and impact the unemployment rate. The R&D data is collected from
2016 and the unemployment rate is collected from 2019. The latest data has not been considered due
to the overarching effects of the COVID-19 pandemic. Using both single and multiple linear
regression models, a negative correlation was found between the unemployment rate and the R&D
expenditure of a country.
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Date
2021-12
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Text
Resource Subtype
Undergraduate Research Paper