The Relationship between Education, Economic Growth and Unemployment: Evidence in Eastern Europe

Abstract

The article attempts to examine the causal relationship between government expenditure on education, tertiary enrolment, economic growth and unemployment of six emerging countries in Eastern Europe between 1998 and 2017 using a vector autoregressive model. We found that government expenditure on education has positive relationships with tertiary enrolment and GDP per capita. The increase of tertiary enrolment contributes to reducing unemployment rate. However, the proportion of tertiary enrolment should be effectively controlled and managed because this generates reduction of government expenditure on education and GDP in Eastern Europe. Economic growth negatively affects government expenditure on education. However, there is no co-integration among variables in the long run. Lastly, policies are recommended to achieve a sustainable development in Eastern Europe.