Unemployment any country, it will not only

Unemployment
has huge importance in the macroeconomic problems. If unemployment be
experienced in any country, it will not only have an effect on the macroeconomic
indicators of this country, but will also damage the social values of such state.
In the  case of Pakistan; the unemployment
was 3.14 percent in 1973; it increased to 3.7 percent in 1980, then it started
declining and became 2.55 percent in 1989. After the year 1989; The
unemployment started increasing and it reach to its highest stage 8.64 percent
in 2003. Afterwards, the unemployment rate reached 5.34 percent in 2010

Apart
from unemployment; inflation is a further macroeconomic issue that damages both
economic and social indicators in any country. Pakistan economy has also come
with this large macroeconomic problem. . The inflation rate was 23.07 percent
in 1973. This year, it increased 26.66 percent in 1974, and it started and in
the year 1980 was 11.94 percent, and afterward this year reached 7.84 percent
in 1989. After year 1989, the inflation in the year 2003 was 2.91% and in the
year 2010 it reached 13.88 percent. The inflation changed every year and
followed both trends and downwards.

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The
real per capita GDP is used as proxy for economic development in this study. It
is normally considered that when there is economic growth in the country; it
increases the speed of economic activity in the country, which leads to
increasing employment.
Increase in employment Increases the power of people’s
purchasing of people in the country and as a result, consolidation consumption
is increasing, in which overall demands are increased and inflation in the
country is increasing Real percentage was GDP. 15025.8 years in 1973; it became
rupees 17561.04 years in 1980, it went up to Rs. In the year 23244.33 years
1990, the above trend continues. In the year 2000, 26474.2 and finally it has
reached the rupee. In 2010, 34588.9

The
association between inflation and unemployment is a relationship which has got
a great fame in the literature. The studies like Rogerson’s (1988); Cooley and
Hansen (1989), Rogerson’s (1988) Mortensen and Pissarides (1994), Shi (1997),
Pissarides (1999), Berentsen, Lagos and Wright (2005), Lehmann (2006), Farmer
and Beyer (2007), Kumar (2008), Berentsen, Wright and Menzio (2008), and Menzio
and Wright (2008) have found a positive relationship between inflation and
unemployment in the long run.

On the other hand; Sala, Snower and Karanassou (2003), Franz
(2005), and Wolters and Schreiber (2007) had found an converse relationship
between inflation and unemployment in the long run.another, the relationship
between economic growth and unemployment, has got huge name in the studies of
macroeconomics .The studies like Vandemoortele (1991); Oladeji (1994), Umo
(1996), Rama (1998), Silvapulle (2004) and Stephen (2012) have found an inverse
relationship between economic growth and unemployment for different periods for
the different countries respectively. It’s based on argument; this study is expected
at finding empirically the impact of inflation; trade openness, urban
population and economic growth as share of total population on unemployment in
case of Pakistan for the period ranges from 1973 – 2010.