Analysis of the Effect of Government Expenditures on Unemployment in Uganda
Abstract
The objective of this study is to assess the impact of government expenditure on unemployment
in Uganda. It uses secondary data from 2005 to 2015. The data is analyzed using STATA
employing a linear regression model and unit root tests with the limitations of the study
specified.
From the results, recurrent government expenditure and government spending on development
significantly affects the unemployment rates in Uganda whereby an increase in the recurrent
government spending significantly reduces the unemployment rate by 0.0021014% and an
increase in the government development spending significantly increases the unemployment rate
by 0.0057929%.
The findings indicate the need for government to increase in its recurrent expenditure as it is
from this expenditure that more public servants are hired and thus reducing unemployment in the
Uganda. The government should also increase in its spending on development as this increases
the amount of money in circulation thus reducing interests’ rates on borrowing thereby
increasing investment which reduces unemployment in Uganda. The government should also
reduce on its spending on donations as it is unproductive and such expenditures create room for
embezzlement and fraud in addition to not creating employment opportunities