Identifying Economic Factors Affecting Unemployment Rates in the United States

Abstract

In this study, we seek to understand how macroeconomic factors such as GDP, inflation, Unemployment Insurance, and S&P 500 index; as well as microeconomic factors such as health, race, and educational attainment impacted the unemployment rate for about 20 years in the United States. Our research question is to identify which factor(s) contributed the most to the unemployment rate surge using linear regression. Results from our studies showed that GDP (negative), inflation (positive), Unemployment Insurance (contrary to popular opinion; negative), and S&P 500 index (negative) were all significant factors, with inflation being the most important one. As for health issue factors, our model produced resultant correlation scores for occurrences of Cardiovascular Disease, Neurological Disease, and Interpersonal Violence with unemployment. Race as a factor showed a huge discrepancies in the unemployment rate between Black Americans compared to their counterparts. Asians had the lowest unemployment rate throughout the years. As for education attainment, results showed that having a higher education attainment significantly reduced one chance of unemployment. People with higher degrees had the lowest unemployment rate. Results of this study will be beneficial for policymakers and researchers in understanding the unemployment rate during the pandemic.