Globalisation and Unemployment Rates in The United States: An ARDL Econometric Approach (1974-2023)

Winta Nur Alifanti; Muhammad Hafizh Fadlurrohman; Earline Nanda Riyannita; Valeri Septa Anggra Haryadi

Authors

Winta Nur Alifanti Universitas Negeri Surabaya
Muhammad Hafizh Fadlurrohman Universitas Negeri Surabaya
Earline Nanda Riyannita Universitas Negeri Surabaya
Valeri Septa Anggra Haryadi Universitas Islam Negeri Sunan Ampel Surabaya

Keywords:

Globalisation, Unemployment, FDI, Economic Growth, ARDL, Time Series Analysis

Abstract

This study analyses the influence of economic growth (GDP), foreign direct investment (FDI), inflation (INF), trade balance (BOT), and money supply growth (BMG) on the unemployment rate in the United States and tests the long- term relationship among these variables. Using annual time series data for the period 1974–2023. The Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests indicate that the research variables exhibit mixed levels of integration, I(0) and I(1), so the Autoregressive Distributed Lag (ARDL) approach was applied. The Bounds Test is used to detect cointegration, and the Error Correction Model (ECM) is estimated to identify short-term dynamics and the speed of adjustment toward long-term equilibrium, along with diagnostic tests to ensure model accuracy. The research findings indicate cointegration among the variables, with long-term results showing that GDP and FDI have a negative and significant impact on unemployment; BOT has a negative impact with marginal significance; BMG has a positive impact with weak significance; and inflation is not significant. The error-correction coefficient of -0.19 indicates that approximately 19% of the long-term imbalance is corrected each period, and all diagnostic tests confirm that the model is free of autocorrelation, heteroskedasticity, and multicollinearity. By applying ARDL-ECM to a long dataset, this study makes an empirical contribution that enriches our understanding of unemployment dynamics in the United States. The results are expected to help policymakers design strategies to reduce unemployment by strengthening the economy, increasing foreign investment, and implementing more effective wage and trade policies.

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