Academic journal article Journal of Economics & Management

Unemployment, Poverty and Economic Growth in Nigeria

Academic journal article Journal of Economics & Management

Unemployment, Poverty and Economic Growth in Nigeria

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1.Introduction

There are divergent views on the effects of unemployment and poverty on economic growth. Scholars like Bardhan (1973), Griffin & Ghose (1979), and Aigbokhan (2000), have argued that economic growth which is supposed to be a stimulus to unemployment and poverty reduction has contributed to even worse economic and social outcome. They further argued that it exacerbates the conditions that lead to poverty and vulnerability due to the failure of the government to address the ever increasing rate of unemployment in the country by considering the number of fresh graduates produced yearly in all the tertiary institution across the country. A high level of unemployment is one of the critical socio-economic problems facing Nigeria. As the labour force of the Nigerian economy continue to grow with her growing number of graduates in thousands yearly, the labour market is not adequate to absorb the rising number of unemployed youth. Consequently, many Nigerians are faced with the problem of unemployment.

More so, the fortunate ones among the unemployed youths are likely to be underemployed, underpay while working for longer hours, and engage in hazardous jobs. This situation has resulted to a number of socio-economic, political and religious challenges which has increase the number of poor in the country. For instance, Tella & Alimi (2016, pp. 2) noted that "the country's achievement toward halving the number of people living less than $1.90/day and $3.10/day as indicated in the Millennium Development Goals (MDGs) is not impressive as she recorded an increase from 46.01% and 71.3% in 1985 to 53.47% and 76.46% in 2009 respectively". Despite the significant growth in real output in the recent years, it has failed to create jobs (Maku & Alimi, 2018) and reduce human-capital poverty. Although Nigeria's economy is projected to continue growing, poverty is likely to get worse as the gap between the rich and the poor has continued to widen. Kale (2012) has termed the Nigerian poverty as a paradox since the output grows with the proportion of Nigerians dwelling in poverty yearly.

There is plenty of study that has quantitatively analysed unemployment, poverty and economic growth in Nigeria. For instance, Okoroafor & Nwaeze (2013) in their research work on poverty and economic growth in Nigeria between 1990 and 2011 have posited that there is a zero correlation between poverty, discomfort index and economic growth in Nigeria. Akeju & Olanipekun (2014) have studied unemployment and economic growth in Nigeria with the Okun's law and shown that a negative relationship exists between unemployment and economic growth. Poverty and unemployment have continued to be core problems facing the economy, likewise other African countries. It has led to human denial of choice and opportunities for living tolerable life (United Nations, 1997) amid plenty. More so, the number of unemployed youth in Nigeria keeps increasing while the gap between the rich and the poor keep widening. On this note, this study re-investigates the link between unemployment, poverty and economic growth in Nigeria between the periods of 1985 to 2015. Furthermore, we investigate the nexus of unemployment, poverty and economic growth in Nigeria by finding a long run and causal relationship among unemployment, poverty and economic growth.

This paper is arranged into five parts. The first section presents the introductory aspect of the study while empirical review of past studies was presented in the second section. The third section provided the methodology, fourth section presents the results and discussion whereas the concluding part is shown in the last section.

2.Literature review

We review relevant studies that have evaluated the links between unemployment, poverty and growth using different data sets varying from panel, cross-section and time series. Empirically, Olson (1984) opined that societies with democratic system of government tend to have organised groups that advocate for unbiased distribution of income and also develop stimulus against factors that could hinder growth. …

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