Comparative Study of the Reciprocal Relationship between Nominal Wages Rates and Unemployment Rates Using the Two-Stage (O.L.S) and Granger Causation Methodologies. Sudan during the period 1992-2017

Abstract

Abstract: The study aimed to know the reciprocal relationship between nominal wage rates and unemployment rates in Sudan during the period 1992-2017. The study used the two-stage least squares methodology to estimate the instantaneous model and Granger's methodology to test the causality between these variables. Where the study came out with the following results: There is a reciprocal causal relationship between the study variables, and the results of the two- stage least squares are more accurate in determining the direction of the relationship. As well as the presence of autoregressive variables with each other. There is also a long-term equilibrium relationship between the nominal wage rates and unemployment rates, and thus there is a co-integration relationship between the variables of the study model. There is a correlation between the nominal wage rates and the unemployment rates. Hence, the study recommends that the state strive to create job opportunities by expanding the production cycle and benefiting from natural, human and material resources. Striving to employ graduates and give them land and funding. As well as improving nominal wages, raising capacities and training. Key words: correlation, nominal wage rates, unemployment rates, O.L.S, Granger causation