BALANCING GROWTH AND JOBS: A STUDY OF MACROECONOMIC FORCES BEHIND UNEMPLOYMENT

Abstract

The main purpose of the research is to look into the effect of inflation, population growth, GDP, and FDI on unemployment in Pakistan. The study used the secondary data from 2020 to 2025 which were obtained from the Statistical Bureau of Pakistan, Ministry of Finance and World Bank data sources. Finally, in order to guarantee the robustness of the results, diagnostic testing was carried out and on use of the Durbin–Watson statistic, no serial correlation was found to exist in the regression model. It is observed from these results that inflation significantly and positively affects unemployment, implying that higher levels of prices contribute to labor market's inefficiency. Population growth, on the other hand, shows the negative statistically significant association with unemployment, meaning that if population growth is being implemented properly, then this effectively reduces unemployment. However, there was not clear evidence for GDP growth and foreign direct investment influx to reduce unemployment in Pakistan. These findings emphasize the diversified reality of unemployment behavior in developing markets, providing a rationale for carefully designed macroeconomic policies that counterbalance inflationary pressures with long-term demographic potential for sustainable labor markets.