Forecasting Employment Rate In Service Sectors In Bangladesh: An Application Of Autoregressive Integrated Moving Average Model
LITON CHANDRA VOUMIK, MOHAMMAD IQBAL HOSSAIN, FARID DEWAN, and MAZNUR RAHMANS
IJED, Vol. 14 No. 1, (2020)
The employment growth rate reflects the socioeconomic development of a country. The service sector is an integral part of the economy in all countries. Service sectors are the top rising sectors in Bangladesh. Specially provides employments, inputs, and public services for the economy. A forecast of employment rate in service sectors can help the implementation of policies, strategies, and budgets to encourage entrepreneurs of service sectors within the target range. The famous forecasting method namely the ARIMA or autoregressive integrated moving average model applied in this study.
Methods/ Statistical analysis:
The purpose of the study is to forecast the employment growth rate in the service sectors (2019–2028). Secondary data analysis and forecast model are done for the available year and employment data extracted from WDI, world bank database, and Bangladesh Labor Bureau website and it has been collected over 28 years. We applied ADF, PP, and KPSS tests to investigate the stationary character of the data. Stata and R studio software was applied to build a structure of the ARIMA method to model and forecast the employment growth rates.
In this study, the employment of Bangladesh from 1991 to 2018 is modeled using ARIMA (P, I, Q) methodology. The forecast of the sample period (1991–2018) showed accuracy by the selected the best two ARIMA (0, 2, 0) and ARIMA (1,1,0) model. The model and results were validated by the lowest values of AIC and BIC, fewer P-values, graphical arrangements of ACF, and PACF plots. Both of the post sample forecasts with ARIMA (0,2,0) and (1,1,0) showed an increasing trend of (2019–2028) employment growth rate in service sectors. If the increasing trend persists, according to ARIMA(0.2.0) the forecast employment rate for 2028 is 43.33% in the service sectors. On the other hand, the employment growth rate in service sectors of Bangladesh would be approximately 47.28% in 2028, based on another ARIMA(1,1,0). Statistical outcomes illustrate that Bangladesh’s employment growth rate in service sectors is an increasing trend that will continue growing in the future.