Determinants of labor demand in Uganda (1987-2021)

Abstract

The objective of the study was to determine the factors influencing labour demand in Uganda by specifically determining the long run determinants of Labor demand, investigating the short run determinants of Labor demand as well as finding out the causal effect of the determinants on Labor demand in Uganda by using the data from World Bank. The Multivariate Linear Regression model revealed that GDP and Capital Formation have statistically significant and positive effect on Labor demand at 5% level of significance holding other factors constant. The VECM results reveal that final consumption expenditure, GDP and capital formation have a statistically significant and negative relationship with Labor demand in the long-run and a statistically significant and positive relationship with Labor demand at 5% level of significance. The study recommended that the government should support agriculturalists to undertake modernization in agriculture, BoU should adopt efficient inflation-adjusting and reducing strategies so as to keep the inflation rate at mild level, aim at investing in the human capital and health and should encourage the establishment of the import substitution industries in Uganda.