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Determinants of the Rate of Unemployment in Nigeria

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  • O'Nwachukwu, Chinedu Increase

Abstract

This study examines the determinants of the rate of unemployment in Nigeria from 1980 to 2016. The model of this study is made up of one dependent variable (Unemployment rate) and five explanatory variables (Government Expenditure, Inflation Rate, First Lag of Unemployment, Population and Real Gross Domestic Product). The study employed the Ordinary Least Squares (OLS) method to estimate the model after using the Augmented Dickey-Fuller to test for unit root. The result shows that Government Expenditure, Inflation Rate and Population are statistically significant in explaining changes in unemployment in Nigeria for the period under review. However, first lag of unemployment and Real Gross Domestic Product are found not to be statistically significant in explaining unemployment in Nigeria. The study recommends allocating higher amount of money to capital expenditure in the budget, and monitoring awarded projects to see that they are completed. The study also recommends that technologies which require human labour to operate be introduced.

Suggested Citation

  • O'Nwachukwu, Chinedu Increase, 2016. "Determinants of the Rate of Unemployment in Nigeria," MPRA Paper 81125, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81125
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    References listed on IDEAS

    as
    1. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-1266, September.
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    More about this item

    Keywords

    Unemployment; Inflation; Real Gross Domestic Product; Government Expenditure;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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