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