Is there a correlation between rate of unemployment and GDP per capita of a country?
Firstly, Correlation. You will have to look it up at the Dr Math website because this box will not allow us to write formulae. Most textbooks concentrate on the relationship between unemployment and inflation, but this question is interesting. Since you can correlate x on y or y on x, you can see whether GDP affects employment or employment affects GDP. If you use GDP per capita, then high unemployment is likely to reduce the value since you will divide GDP by the total population, many of whom will not be working. In addition, high unemployment will reduce the National Income as fewer people are creating wealth. Conversely, if there is a trend that GDP is falling annually (e.g., Zimbabwe), it is likely to cause business failures and thereby increase unemployment.
