The Impact of the Human Development Index, Inflation, and Economic Growth on Unemployment in Afghanistan (2002–2023)

Abstract

Unemployment has been one of the fundamental economic and social challenges in Afghanistan over the past two decades. Despite efforts made to improve key macroeconomic indicators, this challenge continues to persist in the country. The main objective of this study is to examine the impact of the human development index (HDI), inflation, and economic growth on the unemployment rate in Afghanistan during the period 2002–2023. This research adopts a quantitative approach and employs time-series econometric methods. The model is estimated using multiple regression with heteroskedasticity correction based on the Newey–West (HAC) method. The results indicate that economic growth has a negative and statistically significant effect on unemployment; specifically, a one-percent increase in economic growth leads to an average decrease of about 0.063 percent in the unemployment rate. In contrast, the human development index and the inflation rate do not show statistically significant effects on unemployment in Afghanistan. The findings suggest that economic growth alone is not a sufficient condition for reducing unemployment, and the effectiveness of the human development index is realized only when the labor market structure and the country’s skill formation system are aligned with the actual needs of the economy.