Impact of Business Climate and Quality of Life on Employment of South Carolina: Evidences from Panel Cointegration, GMM, Dynamic OLS (DOLS) and Dumitrescu Hurlin Panel Causality Tests

This paper explores the impact of quality of life and business climate variables on employment of South Carolina using county level panel data for the years 1980 through 2015. The methodologies used include panel... [ view full abstract ]

This paper explores the impact of quality of life and business climate variables on employment of South Carolina using county level panel data for the years 1980 through 2015. The methodologies used include panel Cointegration, Dynamic OLS (DOLS), FMOLS, GMM and Dumitrescu-Hurlin panel causality test. The panel cointegration tests and error-correction estimates indicate long-run equilibrium relationship among the variables. The panel Dynamic OLS and GMM estimates show capital investment, education, vehicle registration have significant and positive, while poverty has significant and negative effect on employment. The GMM and FMOLS estimates indicate crime rate has negative effect on employment. The Dumitrescu Hurlin panel causality tests indicate that there is bidirectional causality between wage, capital investment, poverty, number of vehicle registration, and employment.

Key Words: Employment, Wage, Poverty rate, Child-Death Rate, Education, Dynamic OLS, GMM, ECM, Panel Coitegration, Dumitrescu-Hurlin Causality