Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Impact of Unemployment on Output Growth in Nigeria Abu, Maji

Impact of Unemployment on Output Growth in Nigeria, Abu, Maji , Mamman, Andekujwo Baajon, Christopher, Umaru Kumbo

Abstract

This study examined the impact of unemployment on output growth in Nigeria. The results of descriptive statistics proved that the variables were normally distributed based on the Jarque- Bera statistic and its probability. Also, the findings from Augmented Dickey Fuller test (Unit root test) indicates that all the variables were not stationary at level with the exception of inflation rate which were stationary at level. The optimal lag length was lag one (1) used in this study. Moreover, ARDL bound tests indicated that a strong evidence of cointegration among the variables exist. Furthermore, the result indicated that federal government capital expenditure, inflation rate, and real gross domestic product (GDP), positively in Nigeria within the period of this study except unemployment rate and labour participation rate in long run. The ECM value of (-0.910824) or 91 % shows the shocks or divergence among the variables would be converged back in one (1) year an1 month ensured long-run equilibrium in the model built. It implied that UNR influences real GDP negatively in Nigerian economy. This negative relationship between unemployment and output growth rate was in line with Okun’s law (Okun, 1962). It shows both in the short-run and long-run estimates, unemployment rate impacted negatively on output growth rate in Nigeria. On the other hand, the result of Pairwise Granger causality test indicates that there is unidirectional among variables studied in the model. Diagnostic tests reveals that there were not presence of serial correlation and constant variance. Hence, this study recommended that fiscal policy should be made by federal government to increase output growth or real GDP through formulation and implementation of diversification policy in Nigeria, federal government should increase her budgetary allocation to fixed capital formation for the real sector of the economy and Central Bank of Nigeria should be adopted mone

Keywords

UnemploymentOutput growthARDLCapital expenditureOkun’s law

References

Adarkwa, S., Donkor, F & Kyei, E. (2017). The Impact of Economic Growth on Unemployment in Ghana: Which Economic Sector Matters Most? The International Journal of Business & Management, 5 (4):1-3. Ademola, A. S & Badiru, A. (2016). The impact of unemployment and inflation on economic growth in Nigeria (1981-2014), International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology, Kavala,9 (1): 47-55. Ahuja, H.L. (2011). Macroeconomics: Theory and Policy Based Mainly on UGC Model Curriculum. S. Chand and Company, Delhi, India. Akeju K, F, & Olanipekun, D.B. (2015). Unemployment and Economic Growth in Nigeria. International Journal of African and Asian Studies, 11(1): 92-98. Aminu, U. & Anono, A. Z. (2012). An empirical Analysis of The Relationship between Unemployment and Inflation in Nigeria from 1977-2009. Business Journal, Economics and Review, 1(12): 42-61. Oshiokpekhai, R. O. & Oyinkepreye, P.E (2022) Impact of Unemployment on Economic Growth in Nigeria from 1990–2020. Asian Journal of Economics, Business and Accounting, 22(5): 34-46, Ani, E.C, Joel, E & Baajon, M. A. (2019). Exchange Rate and Unemployment in Nigeria: An Analysis. International Journal of Family Business and Management, 3(2): 1-7. Campbell, R., Connel, M.C & Brue, S. (2005). Economics, Principles, Problems and Policies, 16 ed. Central Bank of Nigeria [CBN] (2017-2020). Annual reports and statement of accounts, various issues, Abuja, CBN Publications, Central Bank of Nigeria (CBN) statistical bulletin (Volume 16, 2018 edition, & volume 19, 2019 Edition) retrieved from www.Cenbank.Org. Chang-shuai, L & Zi-juan, L. (2012). Study on the relationship among Chinese unemployment rate', Economic growth and Inflation. Advances in Applied Economics and Finance, 1, 1, World science Publishers, United States. Dornbusch, R. & Fisher, S. (1992). Macroeconomics, 6 ed. New York: McGraw Hill Publisher Ltd. Iloabuchi, C.C. (2019). Analysis of the Effect of Unemployment on the Economic Growth of Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), 10(1): 82-89. ILO (2019). International Labour Organization, Labour Statistics Year book, Geneva. Innocent, E.O. (2014). Unemployment rate in Nigeria: Agenda for government. Academic Journal of interdisciplinary studies, MCSER, Publishing, Rome- Italy. Jhingan, M. L., 2003, Advanced Macroeconomic Theory 11h Edition. Delhi: Vrinda Publications (P) LTD. Khan, B. (2020). Unemployment and economic growth in Nigeria: A Time-Series Analysis. Journal of Economics, Finance and Accounting Studies (JEFAS), 2(1): 16-20. Levine, L. (2013). Economic growth and the unemployment rate. Congressional Research Service 7-5700, www.crs.gov, R42063. NIRSAL (2019). Social Investment Programmes of Nigerian Government. CBN Institution Publication, 12(2): 1-89. Retrieved On 29th March, 2021 from https://studygreen.info/fg-survival-fund-program-for-nigerians/ National Bureau of statistics (NBS, 2019), Various Reports. Nigeria Statistics Annual Reports, Nigeria. Nwankwo, C.A & Ifejiofor, A.P. (2014). Impact of Unemployment on Nigerian Economic Development: A Study of Selected Local Government Area in Anambra State, Nigeria. European Journal of Business and Management, 6(35): 103-112. Ojima, D. (2019). Unemployment and Economic Development in Nigeria (1980-2017). Advances in Social Sciences Research Journal, 6(1) 110-121. Okun, A. M. (1962). Potential GNP & Its Measurement and Significance, American Statistical Association', Proceedings of the Business and Economics Statistics. Onwachukwu, C.I. (2015). Does unemployment significantly impact on economic growth in Nigeria? Global Journal of Human-Social Science: E-Economics, 15(8): 1-5. Ogueze, V.C. & Odim, O.U. (2015). The Cost of Unemployment and its Effects on GDP Growth in Nigeria. World Applied Sciences Journal 33 (1): 86-95. DOI: 10.5829/idosi.wasj.2015.33.01.9286. Oshiokpekhai, O. R., & Egbejule, O. P. (2022). Impact of Unemployment on Economic Growth in Nigeria from 1990–2020. Asian Journal of Economics, Business and Accounting, 22(5), 34–46. Rafindadi, A.S. (2012). Macroeconomic Policy, Output and Unemployment Dynamics in Nigeria: Is There Evidence of Jobless Growth? 53th Annual conference of the Nigerian economic society on ‘‘Youth Employment and Poverty Reduction in Nigeria, NICON Luxury Hotel, Abuja. Sadiku, M.; Ibraimi, A. & Sadiku, L. (2015). Econometric Estimation of the Relationship between Unemployment Rate and Economic Growth of FYR of Macedonia. Procedia Economics and Finance, pp. 19, 69 – 81. Seer, D. (1969).The Meaning of Development. International Development Review 11(4): 3-4. Sinha, N & Tseladikae, K. (2018). Economic Growth and Unemployment Rate for the Economy of Botswana: An Empirical Study. Journal of International Business, 5(2): 1- Seer, D. (1969).The Meaning of Development. International Development Review, 11(4): 3-4. Walterskirchen, E. (1992). The Relationship between Growth, Employment and Unemployment in the EU. Australian Institute of Economic Research Vienna. Umar A. and Zubairu A.A. (2012).Effect of inflation on the growth and development of the Nigerian economy; an empirical analysis. Internal journal of Business and Social Science, 3(10): 23-41. Zhattau, V.S. (2013). Fiscal Policy as an engine of economic growth in Nigeria and international. Journal of Art and Humanities Bashir Dar Ethiopia, 2, (6): 12-38.

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT