Unemployment rate and its mitigation is a major challenge for most economies. The present work attempts to study the determinants of unemployment and its mitigation in the world economy. The independent variables Gross Domestic Product (GDP), Inflation, Population, Foreign Direct Investment (FDI), Trade openness, Labour Force Participation Rate (LFPR), Gross Fixed Capital Formation (GFCF), Life expectancy, Secondary school enrolment and Interest rates were considered for the study. Panel data analysis was carried out on the secondary data for 74 economies. Data was taken from World Development Indicators of World Bank and International Financial Statistics. Random Effects Model and Fixed Effects Model were applied on the data. Fixed Effects (Robust) Model was chosen for analysis. Panel data analysis where FEM was used showed that GDP, inflation rate, population, GFCF and interest rates influenced unemployment significantly. Results confirmed the existence of Okun’s law and Philip’s curve in the world economy. Based on the results, boosting economic growth, maintaining moderate inflation rates and interest rate, increasing domestic savings so as to increase GFCF and ensuring that there are adequate resources and continuous innovation is taking place in the economy will reduce unemployment.

___________________________________________________________________________________

Keywords: Unemployment, GDP, Philp’s Curve, World Economy.