Lifecycle deficit and economic support ratio in Nigeria: The national transfer account approach

Aim/purpose – The benefit of changing the population age structure only accrues to an economy if the labor market absorbs the increasing number of the working population at a given labor income that surpasses the prevailing consumption of that age group. However, the prevailing conditions in Nigeria suggest that consumers outweigh producers amidst the increasing working-age share of the population. While the demographic dividend has been established in some advanced countries, the same cannot be said in Nigeria. Thus, this study uses annual data projections by the United Nations to examine the interplay between consumption, labor income, and the economic support ratio in Nigeria between 2001 and 2050. Design/methodology/approach – The study is anchored on the National Transfer Accounts (NTA) modeling approach. The study used annual population data projections from the United Nations. Age profiles for private-public consumption and labor income data were sourced from the 2018/2019 National Living Standard Survey (NLSS) produced by the Nigerian National Bureau of Statistics. The paper employed the NTA approach to analyze Nigeria’s life cycle deficit and economic support ratio. Findings – Nigeria’s demographic window of opportunity began in 2001 and will last till 2050. Lifecycle surplus exists among the effective producers for 28 years. Also, individuals in Nigeria enjoy financial autonomy from the age of 35 to 63. During the surplus window, individuals’ labor earnings are more than consumption. Research implications/limitations – Nigeria experiences a lifecycle deficit (LCD) between ages 0 and 14 that extends to the early ages of effective production (15 to 34). The country has a weak take-off point of demographic dividend along the transition path. Originality/value/contribution – The study analyzed the composition of age structure, the effects of changes in the population structure of Nigeria, the flow of resources across age groups, and its implications. Relying on the NTA framework, this study attempts to forecast economic growth in Nigeria up to 2050.