Published in Scientific Papers. Series "Management, Economic Engineering in Agriculture and rural development", Vol. 23 ISSUE 1
Written by Akvilė ALEKSANDRAVIČIENĖ, Roberta DULINSKAITĖ, Edgaras MUZIKEVIČIUS

This paper analyses the effect of inflation, gross domestic product (GDP) growth, and average salary on unemployment in Lithuania for the period from 2001 to 2021. First, the theoretical analysis is performed to review the links between inflation, GDP growth, average salary, and unemployment. Considering that the theoretical analysis reveals the effect of three macroeconomic factors, i.e., inflation, GDP growth, and average salary, on unemployment, the methodology of the research is described. It relies on the multiple regression model and its estimation using ordinary least squares (OLS). Econometric analysis reveals that only one out of three macroeconomic factors, i.e., GDP growth, has a statistically significant effect on unemployment and this effect is negative (based on the sign of the regression coefficient). In addition, to address the autocorrelation problem in the regression model, a lagged unemployment variable is included to the model, and it shows a statistically significant positive (based on the sign of the regression coefficient) effect on unemployment. The future study could only cover the agricultural sector since this sector is important for Lithuania and the macroeconomic indicators of this sector are unique compared to other economic activities or general indicators of Lithuania.

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