The Effects of SMEs, Population and Education level on Unemployment in Kingdom of Bahrain
Keywords:SME’s growth, unemployment rate, education level, ADF unit root, ARDL model
Since the begging of the modern age unemployment was always considered a problem of any economy on the globe. Countries and governments around the world were always looking for ways to reduce the unemployment rate but the issue is a complex one with many affecting variables. Job creation was and is not precisely the problem as its happening all the time, rather the rate of creations versus the population and the education level that is appropriate for fresh graduates to enter the labour market. Therefore, the aim of this study is to analyse the effects of SMEs growth, population growth and education level on the unemployment rate in Bahrain. This study used secondary data that was collected over a span of 21 years from many sources like the Ministries of Bahrain and the World Bank data bank. The dependent variable in this study was the unemployment rate and independent variables were SMEs growth, Population growth and education level. The study applied the ADF unit root test for stationary analysis on the variables to determine the right statistical model to use for this study. Result of ADF unit root indicates that some variable was stationary at the level and some were stationary at first difference, thus ARDL model used for further hypotheses analysis. The findings of ARDL show that the two of the variables had a positive effect and one variable has a negative effect on unemployment rate in Bahrain. Finally, the study recommends the nurture of SMEs by issuing helpful policies and creating financial aid programs for new and old SMEs because of how big any effect SMEs can have on lowering the unemployment rate, on the other hand, the creation of training programs to help fresh graduates adapt to the new mentality of the workplace and give them enough experience to be acceptable candidates.