The macroeconomic determinants of youth unemployment: a dynamic analysis of ASEAN-5

Understanding the critical factors involved in youth unemployment is essential to the research process. This study investigates the impact of inflation, GDP, population, and foreign direct investment (FDI) as key macroeconomic determinants of youth unemployment within the ASEAN-5 countries from 1990 to 2019. Utilising the Panel Auto-Regressive Distributed Lag (ARDL) model, this research captures both short-term and long-term dynamics, providing a comprehensive analysis of these relationships. The findings reveal that in the long run, inflation and GDP significantly influence youth unemployment. Specifically, inflation exhibits a positive relationship, indicating that higher inflation rates correlate with increased youth unemployment. Conversely, GDP shows a negative relationship, suggesting that economic growth helps reduce youth unemployment. In the short run, the impact of these variables varies across the ASEAN-5 countries, reflecting their diverse economic structures and policies. The research findings advance the knowledge of the macroeconomic factors for youth unemployment by demonstrating the way in which those factors are related to youth unemployment. The study underscores the importance of maintaining economic stability and fostering growth to mitigate youth unemployment. It also highlights the need for targeted policies that address the unique economic conditions of each country. Recommendations include enhancing vocational training programs, strengthening key policies and programs related to youth entrepreneurship, and implementing policies that attract foreign investment while ensuring it translates into job creation. An increased inflation rate can create a negative impact on the youth employment opportunities within a country, further affecting the necessary resources and infrastructural changes essential for increasing the youth employment rate. Future researchers can expand their research area beyond ASEAN-5 countries to improve the quality and acceptability of their research outcomes. Increased emphasis on the national income scheme and international business policies have been mentioned as effective recommendations for mitigating the challenges associated with youth unemployment within ASEAN-5 countries. Government authorities need to focus on increasing the quality of technical and educational infrastructure to create a sustainable environment for youth employment within ASEAN-5 countries. This research contributes to the understanding of youth unemployment dynamics in the ASEAN-5 and provides valuable insights for policymakers aiming to develop effective strategies to combat this persistent issue.