Socio-Economic Structure and An Empirical Application on the Unemployment-Economic Growth Nexus: The Case of Denmark

Abstract

Macroeconomic indicators are the basic indicators that reveal the economic performance of a country. Economic growth and unemployment status are among the most important macroeconomic indicators that show the economic performance of countries. While economic growth is among the priority targets of every country, unemployment is among the most significant problems faced by countries as it negatively affects individuals and the society economically, socially and psychologically. Denmark is a highly developed country with a high standard of living and well-being. Therefore, the aim of this study is to reveal the socio-economic performance of Denmark by examining the socio-economic structure with various macroeconomic indicators, and then to analyze empirically the relationship between unemployment and economic growth. In the study, which takes into account the period 1980-2021, Granger causality analysis was applied to test the causal relationship between the variables, and then regression analysis was performed with the least squares method. Empirical findings obtained from Granger causality analysis showed that there is a bidirectional causality relationship between unemployment and economic growth. Besides, according to the results obtained from the regression analysis performed with the least squares method, a 1% increase in economic growth in Denmark reduces unemployment by 6.32%.