ABSTRACT.
The term unemployment can be defined as a situation whereby those who are willing and
able to work do not find job. This is mostly seen among greduates of various institutions of
learning especially in underdeveloped nation like Nigeria. The study was designed to
investigate the impact on unemployment on Nigeria economy (1980-2010). The research
focuses on determining the causes and effects of unemployment and how the problem of
unemployment in Nigeria will be reduced to a minimal level or even eradicated. It focuses on
this objective: to determine the relationship between unemployment and economic growth in
Nigeria (GDP).The method of analysis used in testing the hypothesis is the t-test, f-test
e.t.c.Data for the study was obtained from the Central Bank of Nigeria statistical bulletin.
The major findings were that unemployment has a negative effect on the gross domestic
product (GDP) of the Nigerian economy. Some suggestions and policy recommendations
were made based on the findings
vi
TABLE OF CONTENT
Title page- – – – – – – – – -i
DEDICATION- – – – – – – – -ii
ACKNOWLEDGEMENT- – – – – – – -iii
ABSTRACT. – – – – – – – – -iv
TABLE OF CONTENT- – – – – – – -v
CHAPTER ONE
1.0 INTRODUCTION- – – – – – -1
1.1 BACKGROUND OF THE STUDY- – – – -1
1.2 STATEMENT OF THE PROBLEM- – – – -4
1.3 RESEARCH QUESTIONS.- – – – – -5
1.4 OBJECTIVE OF THE STUDY- – – – – -5
1.5 RESEARCH HYPOTHESIS- – – – – -5
1.6 SIGNIFICANCE OF THE STUDY- – – – -5
1.7 SCOPE AND LIMITATIONS OF THE STUDY- – -6
CHAPTER TWO
2.0 LITERATURE REVIEW- – – – – -7
2.1 THEORETICAL FRAMEWORK- – – – -7
2.2 THEORIES OF UNEMPLOYMENT– – – -8
vii
2.2.2 CLASSICAL THEORY OF UNEMPLOYMENT- -8
2.2.3 KEYNESIAN THEORY OF UNEMPLOYMENT- -9
2.2.4 EFFICIENCY WAGE THEORY- – – – -11
2.2.5 THE SEARCH THEORY- – – – – -12
2.2.6 THE INSIDER- OUTSIDER THEORY- – – -13
2.3 EMPERICAL LITERATURE- – – – – -13
2.4 LIMITATIONS OF THE PREVIOUS STUDIES – – -20
CHAPTER THREE
3.0 METHODOLOGY- – – – – – -21
3.1 THE MODEL- – – – – – – -21
3.2 MODEL SPECIFICATION.- – – – – -21
3.3 ESTIMATION TECHNIQUES AND RESULT
EVALUATION.- – – – – – – -23
3.3.2 THE ECONOMIC CRITERIA- – – – -23
3.3.3 THE STATISTICAL CRITERIA- – – – -24
3.3.4 ECONOMETRIC TESTS.- – – – – -25
3.4 NATURE AND SOURCE OF DATA- – – -26
viii
3.5 ECONOMETRIC SOFTWARE PACKAGE- – -26
CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF RESULTS – -27
4.1 PRESENTATION OF RESULT- – – – -27
4.2 RESULT INTERPRETATION- – – – -28
4.2.1 ANALYSIS OF RESULT BASED ON ECONOMIC
CRITERIA- – – – – – – – -28
4.2.2: ANALYSIS BASED ON STATISTICAL CRITERIA – -29
4.2.3: THE F-STATISTICS TEST – – – – -31
4.3 ECONOMETRICS TEST ( 2ND ORDER TEST) – – -32
CHAPTER FIVE
5.0 SUMMARY OF FINDINGS, POLICY RECOMMENDATION
AND CONCLUSION- – – – – – -36
5.1 SUMMARY- – – – – – – -36
5.2 POLICY RECOMMENDATION- – – – -38
5.3 CONCLUSION- – – – – – – -39
BIBLIOGRAPHY- – – – – – – – -40
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Unemployment is generally seen as a macro-economic problem as
well as socio-economic problem .Unemployment arises as a result of
insufficient and non-availability of jobs to correspond with the growing
population, even those who are employed sometimes live with the fear of being
unemployed due to job insecurity and retrenchment of workers. There is
employment of factors of production if they are engaged in production. The
term unemployment could be used in relation to any of the factors of production
which is idle and not being utilized properly for production. However, with
reference to labour, there is unemployment if it is not possible to find jobs for
all those who are eligible and able to work. Labour is said to be underemployed
if it is working below capacity or not fully utilized in production (R.A.I
Anyawuocha 1993)
Unemployment can either be voluntary or involuntary. Voluntary in
the sense that one chooses not to work because he or she has means of support
other than employment. Example is an idle rich man. On the other hand,
involuntary unemployment exist when persons who are eligible and willing to
work at the prevailing rate of pay are unable to find work. (Anyanwa 1995).
2
According to the central bank of Nigeria (2004), unemployment rose to 30%
during 2004 statistics on unemployment rate.
Unemployment has been seen as a world-wide economic problem and
has been categorizedas 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 well
being of the people (Akinboyo, 1987, and Raheem 1993). Unemployment is a
very serious issue in Africa (Vandemortele, 1991, and Rama 1998), and
particularly in Nigeria (Oladeyi, 1994 and Umo, 1996). The need to avert the
negative effect of unemployment has made the tackling of unemployment
problems to feature very prominently in the development objectives of many
developing countries.
In the study of unemployment in Africa Okonkwo (2005) identified
three (3) cause of unemployment, the educational system, the choice of
technology which can either be labour intensive or capital intensive and
inadequate attention to agriculture. The use of machines to replace work done
by labour and computerization has contributed to these social problems in the
sense that what for example forty (40) men can do manually a machine will
only need like five (5) men. Therefore, the remaining thirty five (35) are
unemployed. More so, lack of enough education and skill to have access to
credit and capital.
3
One particular feature of unemployment in Nigeria is that it was more
endemic in the early 1980‟s than any other period. According to Udabah
(1999:62), the major factor contributing to low standard of living in
underdeveloped countries in their relative inadequate or inefficient utilization of
labour in comparism with advanced nations. Unemployment rate is measured by
the proportion of the labour force that is unemployed divided by the total
number of the labour force. The total labour force was projected at 61,249,485
in 2007 indicating an increase of 3.9%. Total employment in 2007 stood at
52,326,923 compared with 50,886,836 in 2006. This represents an annual
increase of 2.8%. The labour force consists of the number of people ageing 18
and over who are employed (that is, those who currently have jobs) and
unemployed (those who do not have jobs but who are actively looking for
work).Individuals who do not fall into either of these group such as retired
people and discouraged workers are not included in the calculation of the labour
force.
The international labour force organization (ILO) defines
unemployment as the proportion of the labour force which was available for but
did not work for at least one hour in the week preceding the survey period.
National Bureau of statistics (N.B.S). Nigeria defines unemployment as the
proportion of the labour force that is available for work but did not work for at
least thirty nine (39) hours in the week preceding survey period.
4
Unemployment according to lipsey (1963:456) brings about
economic waste and cause human suffering. According to Fadayomi, 1992,
Osinubi, 2006, unemployment is as a result of the inability to develop and
utilize the nations manpower resources effectively especially in the rural sector.
The socio-economic effect of unemployment includes: fall in
national output, increase in rural-urban migration, waste of human resources,
high rate of dependency ratio, poverty, depression, frustration, all sorts of
immoral acts and criminal behaviour e.g prostitution, armed robbery e.t.c. The
social effect of unemployment brings to light the need to proffer possible
solution to salvage our nation Nigeria
1.2 STATEMENT OF THE PROBLEM
Working with the data from the national bureau of statistics, it
indicates that the national unemployment rate in the first quarter of 2007 was
14.6%, compared with 13.7% in 2006. The urban and rural rates were 14.4%
and 15.0% respectively compared with 10.2% and 14.8% in 2006. Further
analysis showed that the distribution of unemployment ranged from 14.1%vfor
the age group of 25-44 to 23.5% for the age group of 65-70. Desegregation
according to geopolitical zones showed a very uneven distribution with the
south-south zone having the highest unemployment rate of 29.5% and southwest at the rear with 8.5%. Between these extremes were the north-east with
18.5%, south-east 18.1%, north central 15.8% and north-west 14.2%.
5
It is based on the increasing problem posed by unemployment on
individuals and the nation at large that government has been embarking on
various policies to control and reduce unemployment but yet has not yielded
any positive result, rather it seems to be escalating. Drastic measures must be
taken by government to curtail this problem of unemployment. The statement of
problem is based on the economic, social and political effects of unemployment
1.3 RESEARCH QUESTIONS.
1. Is there any relationship between unemployment and economic growth?
2. Do unemployment have any significant impact on economic growth?
1.4 OBJECTIVE OF THE STUDY
1. To determine the relationship between unemployment and economic
growth in Nigeria
1.5 RESEARCH HYPOTHESIS
The null research hypothesis for this work is;
1. Unemployment does not affect economic growth in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The significance of this study is to make research on the effect of
unemployment for most qualified graduates of various institutes of learning and
6
also qualified skilled labour. The result of this study will provide useful
information needed by government to fight unemployment and help create
employment opportunities in Nigeria.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The scope of this study is centred on the effect of unemployment on the
Nigerian economy. The research work is also centred on thirty years duration
from 1980-2010. The regression analysis was also based on the use of timeseries data extracted from the central bank of Nigeria statistical bulletin. The
method of analysis used in testing the hypothesis is the t-test, f-test e.t.c.
Possible suggestion and recommended were also made.
It is worthy to note that every research work posses alot of problems and
limitations. However, the difficulties encountered includes, inadequate and nonavailability of relevant data owing to the fact that unemployment in most underdeveloped countries e.g Nigeria is not evenly distributed and thus varies from
one place to another, financial constraint, high cost of transportation and the
difficulty in locating the various research centres
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