Unemployment and Inclusive Growth: The Case of Nigeria
Read the full paper (PDF)Abstract
This study explores the relationship between unemployment and inclusive growth in Nigeria using a time series data for a period of 45 years ranging from 1970-2015. In achieving this objective, several quantitative techniques including: the Augmented Dickey-Fuller (ADF) unit root test and the Autoregressive Distributed Lag (ARDL) model/Bounds testing approach were employed. The study found out that in the long run, the rate of unemployment has a significant negative impact on the inclusiveness of the growth process in Nigeria. The study also found that institutional quality and the supply of infrastructure also have a negative and significant impact on inclusive growth in Nigeria. On the other hand, the study results revealed that that the interest rate and level of financial deepening both have a positive and significant impact on inclusive growth in Nigeria. The result implies that the reduction in the rate of unemployment and improvements in the level of financial deepening are key requirements to the improvement in the quality of the growth process in Nigeria. Based on the findings, the study recommends among other: the creation of policy implementation assurance mechanisms to ensure the effective implementation of the government's policies with respect to employment generation. This will ensure the attainment of the nations employment objectives, thereby improving the inclusiveness of the growth process. Increase allocation of bank credit to highly absorptive sectors such as agriculture and industry. This will aid in the promotion of the growth of private sector activity in the country, and thereby reduce the unemployment problem.