Impact of Economic Freedom on Youth Unemployment in the Gulf Cooperation Council Countries

Abstract

This study aims to examine the impact of economic freedom on youth unemployment in the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates during 2005– 2019. Theoretically, it is assumed that the improvement of economic freedom reduces the unemployment rate. In this paper, we seek to verify this hypothesis for youth population in the Gulf Cooperation Council countries. Specifically, we will determine which specific component of economic freedom has the strongest effect on youth unemployment. Using the Panel Ordinary Least Square approach with fixed effects, we find that the greater the economic freedom score, the lower the youth unemployment rate. In addition, the results suggest that only six of the ten components of economic freedom have a significant effect on the youth unemployment rate, name-ly, property rights, government spending, monetary, trade, investment and, financial freedom. These areas should be targeted by policymakers in the Gulf Cooperation Council countries to develop appropriate policies aimed at enhancement of youth employment.