The Dynamic Relationship between Energy Consumption and Level of Unemployment Rates in Malaysia: A Time Series Analysis Based on ARDL Estimation

Abstract

Unemployment is a critical issue that affects the wellbeing of citizens and requires attention in many countries, including Malaysia. However, the impact of macroeconomic factors on unemployment rates, such as energy consumption, has not been thoroughly studied. In this paper, we aim to investigate the impact of various macroeconomic variables, including foreign and domestic investment, trade liberalization, inflation, urbanization, economic growth, corruption, and energy consumption on unemployment rates in Malaysia. Using annual data from 1984 to 2020, we utilized the ARDL estimation to analyze the data. The results show a mixed expected impact between the independent and dependent variables in the long run. Although energy consumption has a negative impact on unemployment rates in the short term, this is not the case in the long run. The paper concludes with a list of policy recommendations.