ABSTRACT
The study was designed to investigate the effect of unemployment on economics
growth in Nigeria for a period of 31 years (1980-2010). It focus is to determine the
relationship between unemployment and economic growth in Nigeria (GDP).The
finding was that unemployment has a positive but insignificant impact on the
gross domestic product (GDP) of the Nigeria economy, Despite the fact that the
effect of unemployment on economic growth is not significant, its positive
coefficient suggest that unemployment rate is also increasing over time, so the
study recommends policies reverse this trend. The study included that
government should formulate policies that will help in proper check of annual
unemployment rate, and its outcome on the effort to reduce it, in order to know
how to battle it, the coming year.
vi
TABLE OF CONTENT
Title page – – – – – – – – – – i
Approval page – – – – – – – – – ii
Dedication- – – – – – – – – – iii
Acknowledgement- – – – – – – – – iv
Abstract – – – – – – – – – – v
Table of contents – – – – – – – – – vi
CHAPTER ONE-INTRODUCTION
1.1 Background of the study – – – – – – 1
1.2 Statement of the problem – – – – – – 3
1.3 Research questions – – – – – – – 5
1.4 Objective of the study – – – – – – – 5
1.5 Research hypothesis – – – – – – – 5
1.6 Scope of the study – – – – – – – 6
1.7 Significance of the study – – – – – – 6
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CHARTER TWO-LITERATURE REVIEW
2.1 Theoretical literature – – – – – – – 8
2.1.1 The classical theory of unemployment – – – 10
2.1.2 Keynesian theory of unemployment – – – – 12
2.2 The relationship between unemployment and economic
growth – – – – – – – – – – 13
2.3 Empirical literature – – – – – – – 17
CHARTER THREE-METHODOLOGY
3.1 The model– – – – – – – – – 24
3.2 Model specification – – – – – – – 25
3.3 Estimation techniques and result evaluation – – – 26
3.3.1 The economic criteria – – – – – – 27
3.3.2 The statistical criteria – – – – – – 27
3.3.3 Econometric tests – – – – – – – 29
3.4 Nature and sources of data – – – – – – 30
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CHAPTER FOUR: DATA PRESENTATION AND INTERPRETATION
OF RESULT
4.1 Presentation of result – – – – – – – 31
4.2 Interpretation of result – – – – – – – 32
4.2.1 Analysis of regression coefficient – – – – 32
4.2.2 Evaluation based on economic apriori expectation-33
4.2.3 Evaluation based on statistical criteria – – – 34
4.3.4 Evaluation based on econometric criteria – – – 37
CHAPTER FIVE: SUMMARY, CONCLUSION AND POLICIES
5.1 Summary of findings – – – – – – – 43
5.2 Conclusion – – – – – – – – – 44
5.3 policy recommendation – – – – – – – 45
Bibliography – – – – – – – – – – 47
Appendix – – – – – – – – – – 50
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In the developing economies, unemployment has been and still is
the countries number one economic problem. This problem has posed
a great challenge to many countries [both developed and developing].it
has been categorized as one of the serious delay to social progress.
Apart from representing a big waste of a countries man power
resources it generates welfare losses in terms of low output thereby
leading to lower income and economic wellbeing.
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 then employment. On the other hand involuntary
unemployment exists when persons who are eligible and willing to
work at the prevailing rate of pay are unable to find work or
employment [anyanwa 1995].
2
In recent times the incidence of unemployment in Nigeria has
been a wide spread cutting across all faces of age groups education
state and geographical entities.
The unemployment problem was more rampant in Nigeria in the
1980 than any other period for instance the unemployment rate rose
from 4.3 in 1976 to 64 in 1980.it was also recorded between 5.3 and 64
during 1980 to 1985 period.
Government and policy makers are increasingly finding it
difficult to grapple successfully with youth unemployment this high rate
of unemployment can be blamed on lack of adequate provision for job
creation in development plans the over expanding educational growth
and the desperate desire on the part of youths to acquire university
education irrespective of course and course contents as a result a
number of skills acquired from the university appear dysfunctional and
irrelevant [Celine 1999].
3
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 all sorts of immoral
acts and criminal behavior e.g. robbery etc all these can categorized
into no or low economic growth 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
In view of the prior observation unemployment has constituted
a problem to the attainment or economic growth of the world in
general but most especially in less developed countries.
The seriousness of unemployment has been enumerated to be
youthful which constitutes the productive forces of the economy thus
making the achievement of high economic growth practically a mirage
in Nigeria within the given span of time [C B N 2004].
4
It is glaring that in 1960 and early 1970 Nigeria Malaysia
Indonesia and other had similar income per capital GDP growth rates
and underdeveloped political structure but today the Asian tigers have
escaped underdevelopment and poverty because of the way their
country was managed thereby leaving Nigeria behind [Ekpo 2004].
The economic measures adopted for long in Nigeria like
structural adjustment programme could not crest the problem of
unemployment to the economic growth of Nigeria economy instead 70
of Nigeria live below poverty line.
Using the time series data on unemployment in Nigeria
between 1975 and 1996 two historical developments evolved out of
the economic history of the country first the year 1974 which coincided
with the oil boom and secondly the year 1986 which manifested the
recession period following the oil boom. The understanding is that
unemployment was still present during the oil boom in the 1980
5
However economist were bothered about the cause of
reducing unemployment by government policies whether the trade off
is worth it and whether the inflation rate that will be allowed will be
favorable enough for the economy.
1.3 RESEARCH QUESTIONS
Does unemployment have any significant impact on economic
growth?
1.4 OBJECTIVE OF THE STUDY.
The broad objective of this study is to ascertain the effect of
unemployment on economic growth in the Nigerian economy. The
specific objective of this study includes;
To determine the impact of unemployment on output level in the
Nigerian economy.
1.5 RESEARCH HYPOTHESIS
This study is guided by the following hypothesis:
Unemployment has no impact on economic growth in Nigeria.
6
1.6 SCOPE OF THE STUDY
The scope of the study is centered on the effect of unemployment
on economic growth in the Nigerian economy. The research work is
centered on thirty years duration from 1980 – 2010.
1.7 SIGNIFICANCE OF THE STUDY
Unemployment in Nigeria has been an issue of interest. A lot of
policies and measures have been adopted to control unemployment,
because it wastes away the productive years of the active population,
moreover, the study will help reduce the declines of our economic
growth.
It will provide information to the Nigerian government and youth who
ignored agriculture in pursuit of white collar jobs.
Furthermore, it will provide useful information needed by government
to fight unemployment and help create employment opportunities in
Nigeria. And finally the study will serve as reference material for further
studies.
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