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A causal relationship between unemployment and economic growth

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  • Kenny S, Victoria

Abstract

Unemployment has been seen as a world-wide economic problem and has been categorized as one of the serious impediments to social progress. Apart from representing a huge waste of a country’s manpower resources, it generates welfare loss in terms of lower output thereby leading to lower income and poor standard of living. The study found adopts the VAR Granger Causality approach to examine the direction of relationship between unemployment (UNEMP) and economic growth rate (RGDP) in Nigeria covering the period of 1981-2016. Key findings revealed a unidirectional VAR Causal relationship between unemployment and economic growth implying that the level of economic activities does not Granger cause the rate of unemployment in Nigeria. Hence government should largely enhance the survival of small and medium scale companies which can help create jobs, lower unemployment and cause sustainable real output growth, further resulting in increase in the rate of employment generation in the economy.

Suggested Citation

  • Kenny S, Victoria, 2019. "A causal relationship between unemployment and economic growth," MPRA Paper 93133, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:93133
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Unemployment; Economic Growth; Causality;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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