Abstract

This paper investigates the relationship between external debt, population growth, and inflation with unemployment in 26 developing countries. The study uses data from 2010 to 2021 and panel data models (fixed, random, and pooled) to analyze the relationship between the variables. Results show that external debt has a significant and positive impact on unemployment across all three models. Similarly, GDP growth has a reducing and significant impact on the unemployment rate, which shows high employment elasticity of growth in the case of these 26 developing countries. Another important finding of the study is that foreign direct investment, inflation, and population growth have a non-significant impact on unemployment. The paper suggests robust macroeconomic policies and effective debt management in these developing countries to address the issue of unemployment.