Unemployment, poverty and economic growth in Nigeria

Aim/purpose – This study investigates the links between unemployment, poverty and economic growth in Nigeria between the periods, 1985-2015. Design/methodology/approach – The paper employed the Augment Dickey Fuller test for unit root test, Johansen cointegration for cointegration, Ganger causality for causality test and Error Correction Model to establish the short-run links between the variables. Findings – The unit root test result revealed that the variables trend with time indicating their failure of integration at level. However, they were found to be stationary at first difference. The causality result revealed that there is no causal relationship between unemployment, poverty and growth in Nigeria. Similarly, the cointegration results showed that there is no long-run relationship between unemployment, poverty and economic growth in Nigeria. The short-run parameter estimates indicated that unemployment has a negative and significant relationship with growth. However, the coefficient of the interaction between unemployment and poverty is positive and significant at the conventional level. Research implication/limitations – This study suggest that the output growth in the country will occur even if there are poor people as defined in absolute terms. The economy will still expand even if the number of poor people increases. This is also the case in the short run, revealing that the economy has grown even though over the years, the numbers of poor people have increased. Thus, there is a need for stable macroeconomic policies that would ensure equal distribution of income so that the poor also benefits from the country’s growth. Originality/value/contribution – This study empirically examines the contribution of output growth towards employment generation and poverty reduction using data sets from the Central Bank of Nigeria, National Bureau of Statistics and World Bank.